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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~March 3031, ~~2023~~2024

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 001-34856

THE HOWARD HUGHES CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			36-4673192
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification number)

9950 Woodloch Forest Drive, Suite 1100, The Woodlands, Texas 77380

(Address of principal executive offices, including zip code)

(281) 719-6100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Note: The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15 (d) of the Securities Exchange Act of 1934.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Securities registered pursuant to Section 12(b) of the Act: None

The number of shares of common stock outstanding as of ~~October~~May 301, ~~2023~~2024, was 10. These shares are 100% owned by Howard Hughes Holdings Inc.

OMISSION OF CERTAIN INFORMATION

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with the reduced disclosure format.

Table of Contents

TABLE OF CONTENTS		Page
PART I
Item 1.	Financial Statements
	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	8
	Note 1. Presentation of Financial Statements and Significant Accounting Policies	8
	Note 2. Investments in Unconsolidated Ventures	1110
	Note 3. Acquisitions and Dispositions	1413
	Note 4. Impairment	1614
	Note 5. Other Assets and Liabilities	1714
	Note 6. Mortgages, Notes, and Loans Payable, Net	1815
	Note 7. Fair Value	2017
	Note 8. Derivative Instruments and Hedging Activities	2118
	Note 9. Commitments and Contingencies	2320
	Note 10. Income Taxes	2522
	Note 11. Accumulated Other Comprehensive Income (Loss)	2522
	Note 12. Common Stock and Equity	26
	Note 12. Revenues	23
	Note 13. Revenues	26
	Note 13. Leases	24
	Note 14. Leases	28
	Note 14. Segments	26
	Note 15. Segments	30
Item 2.	Management’s Narrative Analysis of Results of Operations	28
Item 2.	Management’s Narrative Analysis of Results of Operations	33
	Forward-Looking Information	29
	Forward-Looking Information	34
	Overview	31
	Overview	36
	Results of Operations	33
	Results of Operations	37
Item 4.	Controls and Procedures	44
Item 4.	Controls and Procedures	52
PART II
Item 1.	Legal Proceedings	5345
Item 1A.	Risk Factors	5345
Item 6.	Exhibits	5445


FINANCIAL STATEMENTS			Table of Contents


PART I

Item 1. Condensed Consolidated Financial Statements (Unaudited)

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

thousands except par values and share amounts	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
ASSETS
Master Planned Communities assets	$	2,~~472~~481,~~497~~538	$	2,~~411~~445,~~526~~673
Buildings and equipment	4,~~093~~207,~~344~~900		4,~~246~~177,~~389~~677
Less: accumulated depreciation	(~~987~~1,~~801~~071,110)		(~~867~~1,~~700~~032,226)
Land	303,~~685~~380		~~312~~303,~~230~~685
Developments	1,~~159~~438,~~215~~924		1,~~125~~272,~~027~~445
Net investment in real estate	7,~~040~~360,~~940~~632		7,~~227~~167,~~472~~254
Investments in unconsolidated ventures	~~225~~213,~~580~~433		~~246~~220,~~171~~258
Cash and cash equivalents	~~491~~462,~~679~~699		~~626~~631,~~653~~548
Restricted cash	~~444~~429,~~119~~130		~~472~~421,~~284~~509
Accounts receivable, net	~~108~~111,~~875~~117		~~103~~115,~~437~~045
Municipal Utility District receivables, net	~~593~~584,~~984~~222		~~473~~550,~~068~~884
Deferred expenses, net	~~141~~145,~~410~~833		~~128~~142,~~865~~561
Operating lease right-of-use assets	45,~~596~~649		4644,~~926~~897
Other assets, net	~~276~~280,~~385~~938		~~278~~281,~~587~~656
Total assets	$	9,~~368~~633,~~568~~653	$	9,~~603~~575,~~463~~612
LIABILITIES
Mortgages, notes, and loans payable, net	$	5,~~196~~391,~~000~~243	$	45,~~747~~302,~~183~~620
Operating lease obligations	5153,~~761~~065		51,~~321~~584
Deferred tax liabilities, net	8771,~~288~~092		~~254~~88,~~336~~065
Accounts payable and other liabilities	1,~~003~~105,~~868~~982		~~944~~1,~~511~~074,746
Total liabilities	6,~~338~~621,~~917~~382		56,~~997~~517,~~351~~015
Commitments and Contingencies (see Note 9)
EQUITY
Preferred stock: no shares authorized or issued as of September 30, 2023; $0.01 par value, 50,000,000 shares authorized, and none issued as of December 31, 2022	—		—
Common stock: 10 shares authorized, issued, and outstanding as of March 31, 2024 and December 31, 2023	—		—
Common stock: 10 shares authorized, issued, and outstanding as of September 30, 2023; $0.01 par value, 150,000,000 shares authorized, 56,226,273 shares issued, and 49,801,997 outstanding as of December 31, 2022	—		564
Additional paid-in capital	3,377,172		3,374,284
Additional paid-in capital	3,374,128		3,972,561
Retained earnings (accumulated deficit) attributable to Howard Hughes Holdings Inc.	(434,928)		(383,012)
Retained earnings (accumulated deficit) attributable to Howard Hughes Holdings Inc.	(417,982)		168,077
Accumulated other comprehensive income (loss)	3,897		1,272
Accumulated other comprehensive income (loss)	7,571		10,335
Total equity attributable to Howard Hughes Holdings Inc.	2,946,141		2,992,544
Treasury stock, at cost, no shares as of September 30, 2023, and 6,424,276 shares as of December 31, 2022	—		(611,038)
Noncontrolling interests	66,130		66,053
Total equity attributable to Howard Hughes Holdings Inc.	2,963,717		3,540,499
Total equity	3,012,271		3,058,597
Noncontrolling interests	65,934		65,613
Total liabilities and equity	$	9,633,653	$	9,575,612
Total equity	3,029,651		3,606,112
Total liabilities and equity	$	9,368,568	$	9,603,463

See Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 2


FINANCIAL STATEMENTS			Table of Contents

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
thousands	~~2023~~		~~2022~~		~~2023~~2024		~~2022~~2023
REVENUES
Condominium rights and unit sales	$	~~25,962~~	$	~~418,645~~	$	~~46,915~~23	$	~~459~~6,~~681~~087
Master Planned Communities land sales	~~75,378~~		~~52,585~~		~~177~~32,~~045~~415		~~199~~59,~~032~~361
Rental revenue	~~105,192~~		~~96,917~~		~~306~~107,~~395~~751		~~296~~97,~~081~~864
Other land, rental, and property revenues	~~46,280~~		~~52,550~~		~~112~~18,~~146~~383		~~119~~18,~~870~~968
Builder price participation	~~15,847~~		~~18,852~~		4512,~~763~~566		5114,~~819~~009
Total revenues	~~268,659~~		~~639,549~~		~~688~~171,~~264~~138		1196,~~126,483~~289
EXPENSES
Condominium rights and unit cost of sales	~~22,537~~		~~295,300~~		563,~~390~~861		~~329~~4,~~026~~536
Master Planned Communities cost of sales	~~28,264~~		~~19,355~~		6612,~~134~~904		7522,~~304~~003
Operating costs	~~92,439~~		~~85,089~~		~~248~~74,~~626~~289		~~236~~72,~~763~~387
Rental property real estate taxes	~~15,262~~		~~12,118~~		4614,~~259~~695		4015,~~314~~419
Provision for (recovery of) doubtful accounts	~~1,446~~		~~106~~		~~(1,000)~~834		(2,~~238~~420)
General and administrative	~~21,410~~		~~19,471~~		6530,~~180~~174		6023,~~874~~553
Depreciation and amortization	~~55,974~~		~~50,015~~		~~161~~52,~~204~~247		~~147~~52,~~584~~009
Other	~~2,225~~		~~2,902~~		83,~~885~~818		73,~~985~~571
Total expenses	~~239,557~~		~~484,356~~		~~651~~192,~~678~~822		~~900~~191,~~088~~058
OTHER
Provision for impairment	(672,492)		—		(672,492)		—
Gain (loss) on sale or disposal of real estate and other assets, net					4,794		4,730
Gain (loss) on sale or disposal of real estate and other assets, net	16,286		—		21,000		4,009
Other income (loss), net					891		4,981
Other income (loss), net	173		2,004		3,547		2,497
Total other					5,685		9,711
Total other	(656,033)		2,004		(647,945)		6,506
Operating income (loss)					(15,999)		14,942
Operating income (loss)	(626,931)		157,197		(611,359)		232,901
Interest income					8,118		4,092
Interest income	7,729		995		16,813		1,273
Interest expense					(41,918)		(38,137)
Interest expense	(38,552)		(24,373)		(110,636)		(79,963)
Equity in earnings (losses) from unconsolidated ventures					(19,135)		(4,802)
Gain (loss) on extinguishment of debt	(48)		—		(48)		(645)
Income (loss) before income taxes					(68,934)		(23,905)
Equity in earnings (losses) from unconsolidated ventures	(30,886)		7,708		(41,874)		19,528
Income tax expense (benefit)					(17,029)		(1,278)
Income (loss) before income taxes	(688,688)		141,527		(747,104)		173,094
Net income (loss)					(51,905)		(22,627)
Income tax expense (benefit)	(144,701)		33,858		(161,349)		41,822
Net (income) loss attributable to noncontrolling interests					(10)		(118)
Net income (loss)	(543,987)		107,669		(585,755)		131,272
Net income (loss) attributable to Howard Hughes Holdings Inc.					$	(51,915)	$	(22,745)
Net (income) loss attributable to noncontrolling interests	(46)		427		(166)		510
Net income (loss) attributable to Howard Hughes Holdings Inc.	$	(544,033)	$	108,096	$	(585,921)	$	131,782

See Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 3


FINANCIAL STATEMENTS			Table of Contents

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
			Three Months Ended March 31,
thousands	~~2023~~		~~2022~~		~~2023~~2024		~~2022~~2023
Net income (loss)	$	~~(543,987)~~	$	~~107,669~~	$	(~~585~~51,~~755~~905)	$	~~131~~(22,~~272~~627)
Other comprehensive income (loss):
Interest rate caps and swaps (a)	~~(182)~~		~~7,522~~		(2,~~764)~~625		31(5,~~064~~330)
Reclassification of the Company's share of previously deferred derivative gains to net income (b)	—		—		—		(6,723)
Other comprehensive income (loss)					2,625		(5,330)
Other comprehensive income (loss)	(182)		7,522		(2,764)		24,341
Comprehensive income (loss)					(49,280)		(27,957)
Comprehensive income (loss)	(544,169)		115,191		(588,519)		155,613
Comprehensive (income) loss attributable to noncontrolling interests					(10)		(118)
Comprehensive (income) loss attributable to noncontrolling interests	(46)		427		(166)		510
Comprehensive income (loss) attributable to Howard Hughes Holdings Inc.					$	(49,290)	$	(28,075)
Comprehensive income (loss) attributable to Howard Hughes Holdings Inc.	$	(544,215)	$	115,618	$	(588,685)	$	156,123

(a)Amounts are shown net of tax ~~benefit~~expense of $0.18 million for the three months ended ~~September~~March 3031, ~~2023~~2024, and ~~$0.8 million for the nine months ended September 30, 2023, and~~ tax ~~expense~~benefit of $21.26 million for the three months ended ~~September~~March 3031, ~~2022, and $9~~2023.~~3 million for the nine months ended September 30, 2022.~~

(b)In March 2022, the Company completed the sale of its ownership interest in 110 North Wacker and released a net of $6.7 million from Accumulated other comprehensive income (loss), representing the Company’s $8.6 million share of previously deferred gains associated with the Venture’s derivative instruments net of tax expense of $1.9 million. See Note 2 - Investments in Unconsolidated Ventures for additional information.

See Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 4


FINANCIAL STATEMENTS			Table of Contents

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

				Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)					Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Common Stock									Treasury Stock
thousands except shares	Shares	Amount								Shares	Amount
Balance at June 30, 2023	56,533,030	$	566	$	3,980,780	$	126,189	$	7,753	(6,444,748)	$	(612,663)	$	3,502,625	$	65,828	$	3,568,453
Balance at December 31, 2023	10	$	—	$	3,374,284	$	(383,012)	$	1,272	—	$	—	$	2,992,544	$	66,053	$	3,058,597
Net income (loss)	—	—		—		(~~544~~51,~~033~~915)		—		—	—		(~~544~~51,~~033~~915)		4610		(~~543~~51,~~987~~905)
Interest rate swaps, net of tax expense (benefit) of $(53)	—	—		—		—		(182)		—	—		(182)		—		(182)
Interest rate swaps, net of tax expense (benefit) of $775	—	—		—		—		2,625		—	—		2,625		—		2,625
Teravalis noncontrolling interest	—	—		—		—		—		—	—		—		6067		6067
Stock plan activity	15,749	—		2,919		—		—		(1,156)	(97)		2,822		—		2,822
Capital transactions with HHH	—	—		2,888		(1)		—		—	—		2,887		—		2,887
Stock conversion to HHH	(56,548,779)	(566)		(612,194)		—		—		6,445,904	612,760		—		—		—
Balance at March 31, 2024	10	$	—	$	3,377,172	$	(434,928)	$	3,897	—	$	—	$	2,946,141	$	66,130	$	3,012,271
HHC shares issued to HHH	10	—		—		—		—		—	—		—		—		—
Capital transactions with HHH	—	—		2,623		(138)		—		—	—		2,485		—		2,485
Balance at September 30, 2023	10	$	—	$	3,374,128	$	(417,982)	$	7,571	—	$	—	$	2,963,717	$	65,934	$	3,029,651
Balance at June 30, 2022	56,295,548	$	564	$	3,967,194	$	7,230	$	2,362	(6,032,999)	$	(583,952)	$	3,393,398	$	50,403	$	3,443,801
Net income (loss)	—	—		—		108,096		—		—	—		108,096		(427)		107,669
Interest rate swaps, net of tax expense (benefit) of $2,247	—	—		—		—		7,522		—	—		7,522		—		7,522
Teravalis noncontrolling interest	—	—		—		—		—		—	—		—		15,025		15,025
Repurchase of common shares	—	—		—		—		—		(368,806)	(25,440)		(25,440)		—		(25,440)
Stock plan activity	11,838	—		2,646		—		—		(4,580)	(332)		2,314		—		2,314
Balance at September 30, 2022	56,307,386	$	564	$	3,969,840	$	115,326	$	9,884	(6,406,385)	$	(609,724)	$	3,485,890	$	65,001	$	3,550,891
Balance at December 31, 2022	56,226,273	$	564	$	3,972,561	$	168,077	$	10,335	(6,424,276)	$	(611,038)	$	3,540,499	$	65,613	$	3,606,112
Net income (loss)	—	—		—		(~~585~~22,~~921~~745)		—		—	—		(~~585~~22,~~921~~745)		~~166~~118		(~~585~~22,~~755~~627)
Interest rate swaps, net of tax expense (benefit) of $(811)	—	—		—		—		(2,764)		—	—		(2,764)		—		(2,764)
Interest rate swaps, net of tax expense (benefit) of $(1,559)	—	—		—		—		(5,330)		—	—		(5,330)		—		(5,330)
Teravalis noncontrolling interest	—	—		—		—		—		—	—		—		~~177~~56		~~177~~56
Stock plan activity	~~322~~201,~~506~~655	2		114,~~138~~953		—		—		(217,~~628~~166)	(~~1,722~~621)		94,~~418~~334		—		94,~~418~~334
Stock conversion to HHH	(56,548,779)	(566)		(612,194)		—		—		6,445,904	612,760		—		—		—
HHC shares issued to HHH	10	—		—		—		—		—	—		—		—		—
Capital transactions with HHH	—	—		2,623		(138)		—		—	—		2,485		—		2,485
Other	—	—		—		—		—		—	—		—		(22)		(22)
Balance at September 30, 2023	10	$	—	$	3,374,128	$	(417,982)	$	7,571	—	$	—	$	2,963,717	$	65,934	$	3,029,651
Balance at March 31, 2023	56,427,928	$	566	$	3,977,514	$	145,332	$	5,005	(6,431,442)	$	(611,659)	$	3,516,758	$	65,765	$	3,582,523
Balance at December 31, 2021	56,173,276	$	563	$	3,960,418	$	(16,456)	$	(14,457)	(2,107,615)	$	(220,073)	$	3,709,995	$	675	$	3,710,670
Net income (loss)	—	—		—		131,782		—		—	—		131,782		(510)		131,272
Interest rate swaps, net of tax expense (benefit) of $9,279	—	—		—		—		31,064		—	—		31,064		—		31,064
Deconsolidation of Ward Village homeowners’ associations	—	—		—		—		—		—	—		—		(210)		(210)
Teravalis noncontrolling interest	—	—		—		—		—		—	—		—		65,046		65,046
Reclassification of the Company’s share of previously deferred derivative gains, net of tax expense of $1,912 (a)	—	—		—		—		(6,723)		—	—		(6,723)		—		(6,723)
Repurchase of common shares	—	—		—		—		—		(4,283,874)	(388,372)		(388,372)		—		(388,372)
Stock plan activity	134,110	1		9,422		—		—		(14,896)	(1,279)		8,144		—		8,144
Balance at September 30, 2022	56,307,386	$	564	$	3,969,840	$	115,326	$	9,884	(6,406,385)	$	(609,724)	$	3,485,890	$	65,001	$	3,550,891

(a)In March 2022, the Company completed the sale of its ownership interest in 110 North Wacker and released a net of $6.7 million from Accumulated other comprehensive income (loss), representing the Company’s $8.6 million share of previously deferred gains associated with the Venture’s derivative instruments net of tax expense of $1.9 million. See Note 2 - Investments in Unconsolidated Ventures for additional information.

See Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 5


FINANCIAL STATEMENTS			Table of Contents

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
thousands	~~2023~~2024		~~2022~~2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(~~585~~51,~~755~~905)	$	~~131~~(22,~~272~~627)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation	~~145~~45,~~707~~827		~~132~~46,~~378~~941
Amortization	125,~~739~~518		124,~~793~~148
Amortization of deferred financing costs	93,~~009~~256		72,~~922~~937
Amortization of intangibles other than in-place leases	~~2,457~~819		~~2,457~~819
Straight-line rent amortization	(52,~~921~~231)		(31,~~948~~499)
Deferred income taxes	(~~166~~17,~~237~~747)		16(1,~~193~~885)
Restricted stock and stock option amortization	124,~~444~~310		94,~~174~~954
Net gain on sale of properties	(214,~~000~~794)		(4,~~018~~731)
Net gain on sale of unconsolidated ventures	—		(5,016)
Equity in (earnings) losses from unconsolidated ventures, net of distributions and impairment charges	23,877		7,835
(Gain) loss on extinguishment of debt	48		645
Provision for doubtful accounts	1,644		471
Impairment charges	672,492		—
Master Planned Community development expenditures	(77,098)		(89,345)
Equity in (earnings) losses from unconsolidated ventures, net of distributions and impairment charges	49,901		(6,037)
Master Planned Community cost of sales	12,904		22,003
Provision for doubtful accounts	4,670		(1,918)
Condominium development expenditures	(110,095)		(124,515)
Master Planned Community development expenditures	(256,214)		(286,178)
Condominium rights and units cost of sales	3,861		4,300
Master Planned Community cost of sales	63,015		69,498
Condominium development expenditures	(349,211)		(235,104)
Condominium rights and units cost of sales	54,167		316,612
Other	1,319		—
Net Changes:
Accounts receivable, net	(132,~~703~~632)		4(1,~~696~~836)
Other assets, net	(323,~~008~~260)		~~(33~~18,~~878)~~307
Condominium deposits received, net	8149,~~896~~666		~~141~~63,~~500~~494
Deferred expenses	(22,414)		(19,419)
Deferred expenses, net	(7,849)		(7,089)
Accounts payable and other liabilities	(1744,~~141~~941)		(3466,~~120~~952)
Cash provided by (used in) operating activities	(~~359~~170,~~740~~870)		~~215~~(144,~~504~~270)
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment expenditures	(~~5,609~~462)		(1,~~270~~272)
Operating property improvements	(4410,~~295~~795)		(409,~~237~~555)
Property development and redevelopment	(~~205~~60,~~253~~921)		(~~270~~74,~~889~~584)
Acquisition of assets	(5,898)		—
Proceeds from sales of properties, net	13,175		905
Proceeds from sales of properties, net	31,315		33,081
Reimbursements under tax increment financings and grants	3,567		—
Reimbursements under tax increment financings	1,469		127
Distributions from unconsolidated ventures	—		2,200
Distributions from unconsolidated ventures	8,605		205,726
Investments in unconsolidated ventures, net	(18,200)		(11,790)
Investments in unconsolidated ventures, net	(34,075)		(82,363)
Cash provided by (used in) investing activities	(73,636)		(94,096)
Cash provided by (used in) investing activities	(253,741)		(155,825)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages, notes, and loans payable	~~559~~89,~~305~~028		~~576~~32,~~230~~072
Principal payments on mortgages, notes, and loans payable	(~~110~~3,~~847~~703)		(~~534~~3,~~458~~285)
Repurchases of common shares	—		(403,863)
Special Improvement District bond funds released from (held in) escrow	249		1,364
Debt extinguishment costs	—		(32)
Deferred financing costs and bond issuance costs, net	3		(82)
Special Improvement District bond funds released from (held in) escrow	6,721		13,015
Taxes paid on stock options exercised and restricted stock vested	(944)		(1,524)
Deferred financing costs and bond issuance costs, net	(2,371)		(7,934)
Distributions to HHH	(1,422)		—
Taxes paid on stock options exercised and restricted stock vested	(2,644)		(2,461)
Contributions from Teravalis noncontrolling interest owner	67		56
Stock options exercised	—		345
Cash provided by (used in) financing activities	83,278		28,601
Issuance of Teravalis noncontrolling interest	—		31,234
Net change in cash, cash equivalents, and restricted cash	(161,228)		(209,765)
Distribution to noncontrolling interest upon sale of 110 North Wacker	—		(22,084)
Cash, cash equivalents, and restricted cash at beginning of period	1,053,057		1,098,937
Contributions from Teravalis noncontrolling interest owner	178		—
Cash, cash equivalents, and restricted cash at end of period	$	891,829	$	889,172
Cash provided by (used in) financing activities	450,342		(350,008)
Net change in cash, cash equivalents, and restricted cash	(163,139)		(290,329)
Cash, cash equivalents, and restricted cash at beginning of period	1,098,937		1,216,637
Cash, cash equivalents, and restricted cash at end of period	$	935,798	$	926,308

HHC ~~2023~~2024 FORM 10-Q | 6


FINANCIAL STATEMENTS			Table of Contents

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
thousands	~~2023~~2024		~~2022~~2023
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	~~491~~462,~~679~~699	$	~~354~~417,~~605~~746
Restricted cash	~~444~~429,~~119~~130		~~571~~471,~~703~~426
Cash, cash equivalents, and restricted cash at end of period	$	~~935~~891,~~798~~829	$	~~926~~889,~~308~~172
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid, net	$	~~199~~100,~~208~~158	$	~~168~~81,~~358~~242
Interest capitalized	8436,~~471~~315		7324,~~171~~964
Income taxes paid (refunded), net	4,270		24,240
NON-CASH TRANSACTIONS
Issuance of Teravalis noncontrolling interest	$	—	$	33,810
Accrued property improvements, developments, and redevelopments	$	(4,954)	$	7,115
MPC land contributed to real unconsolidated ventures	—		21,450
Non-cash consideration from sale of properties	—		5,250
Accrued property improvements, developments, and redevelopments	(6,055)		9,138
Capitalized stock compensation	1,476		860
Non-cash proceeds from sale of properties	5,250		—
Reassessment of operating lease right-of-use asset, net	1,454		—
Special Improvement District bond transfers associated with land sales	3,119		5,860
Reassessment of operating lease obligation	1,952		—
Capitalized stock compensation	3,407		3,852
Initial recognition of operating lease right-of-use asset, net	—		1,488
Initial recognition of operating lease obligation	—		1,621

See Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 7


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


1. Presentation of Financial Statements and Significant Accounting Policies

~~New~~General These ~~Holding~~unaudited ~~Company~~Condensed ~~Structure On~~Consolidated ~~July~~Financial ~~17,~~Statements ~~2023,~~have been prepared by The Howard Hughes Corporation (HHC or the Company) ~~announced~~in ~~that~~accordance ~~its~~with ~~Board~~accounting ofprinciples ~~Directors~~generally ~~authorized~~accepted ~~the~~in ~~creation of a holding company structure. On August 11, 2023, upon~~ the ~~consummation~~United States of ~~the~~America ~~transaction, Howard Hughes Holdings Inc.~~ (~~HHH~~GAAP)~~, the new parent holding company, replaced HHC as the public company trading on the New York Stock Exchange~~. ~~Existing~~References ~~shares~~to ~~of common stock of~~ HHC ~~were automatically converted~~, ~~on a one-for-one basis, into shares of common stock of HHH, with~~ the ~~same designations~~Company, ~~rights~~we, ~~powers~~us, and ~~preferences,~~our ~~and~~refer ~~the~~to ~~same~~The ~~qualifications,~~Howard ~~limitations,~~Hughes Corporation and ~~restrictions,~~its asconsolidated ~~the~~subsidiaries ~~shares~~unless ofotherwise ~~HHC~~specifically ~~common~~stated. ~~stock~~References ~~immediately~~to ~~prior~~Howard toHughes ~~the~~Holdings ~~reorganization~~Inc. (HHH) ~~became~~refer ~~the successor issuer~~ to ~~HHC~~the ~~pursuant~~Company’s toparent ~~Rule~~holding ~~12g-3~~company, ~~(a)~~Howard ~~under~~Hughes ~~the~~Holding ~~Exchange~~Inc., ~~Act~~ and ~~replaced~~its ~~HHC~~consolidated assubsidiaries, ~~the~~including ~~public company trading on~~ the ~~New~~Company, ~~York~~unless ~~Stock~~otherwise ~~Exchange~~specifically ~~under the ticker symbol "HHH~~stated."

~~The~~In ~~Company~~accordance ~~believes~~with ~~that~~the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the ~~reorganization~~Securities ~~will~~and ~~promote~~Exchange Commission (the ~~growth~~SEC), these Condensed Consolidated Financial Statements do not include all of ~~its~~the ~~businesses~~information and disclosures required by ~~providing~~GAAP ~~additional~~for ~~flexibility~~complete tofinancial ~~fund~~statements. ~~future~~Readers ~~investment~~of ~~opportunities~~this ~~and~~quarterly report on Form 10-Q (Quarterly Report) should refer to ~~segregate~~The ~~assets~~Howard ~~and~~Hughes ~~related~~Corporation ~~liabilities~~audited Consolidated Financial Statements, which are included in ~~separate~~its ~~subsidiaries~~annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024 (the Annual Report). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and equity for the interim periods have been included. The results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, and future fiscal years.

~~Seaport~~Principles ~~Entertainment On~~of ~~October~~Consolidation 5,and ~~2023,~~Basis ~~HHH~~of ~~announced~~Presentation The ~~the~~consolidated ~~intent~~financial tostatements ~~form~~include athe ~~new~~accounts ~~division,~~of ~~Seaport~~The ~~Entertainment,~~Howard ~~that~~Hughes isCorporation ~~expected~~and toits ~~include~~subsidiaries ~~HHC’s~~after ~~entertainment-related~~elimination ~~assets~~of inintercompany ~~New~~balances ~~York~~ and ~~Las~~transactions. ~~Vegas,~~The ~~including~~Company ~~the~~also ~~Seaport~~consolidates incertain ~~Lower~~variable ~~Manhattan~~interest ~~and~~entities ~~the~~(VIEs) ~~Las~~in ~~Vegas~~accordance ~~Aviators~~with ~~Triple-A~~Financial ~~Minor~~Accounting ~~League~~Standards ~~Baseball~~Board’s ~~team,~~(FASB) asAccounting ~~well~~Standards asCodification ~~HHC’s~~(ASC) ~~ownership~~810 ~~stake~~Consolidation. inThe ~~Jean-Georges~~outside ~~Restaurants~~equity ~~and~~interests ~~its~~in ~~80%~~certain ~~interest~~entities incontrolled by the ~~air~~Company ~~rights~~are ~~above~~reflected in the ~~Fashion~~Condensed ~~Show~~Consolidated ~~Mall~~Financial inStatements ~~Las~~as ~~Vegas~~noncontrolling interests.

HHH is establishing Seaport Entertainment with the intention of completing its spinoff as an independent, publicly traded company in 2024, but there can be no assurance regarding the ultimate timing of the spinoff or that the spinoff will ultimately occur. The planned separation of Seaport Entertainment from Howard Hughes will refine the identity of HHH as a pure-play real estate company focused solely on its portfolio of acclaimed master planned communities and allow the new company, Seaport Entertainment, to operate independently as an entertainment-focused enterprise.

General These unaudited Condensed Consolidated Financial Statements have been prepared by HHC in accordance with accounting principles generally accepted in the United States of America (GAAP). References to HHC, the Company, we, us, and our, refer to The Howard Hughes Corporation and its consolidated subsidiaries unless otherwise specifically stated. References to HHH refer to the Company’s parent holding company, Howard Hughes Holding Inc., and its consolidated subsidiaries, including the Company, unless otherwise specifically stated.

In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission (the SEC), these Condensed Consolidated Financial Statements do not include all of the information and disclosures required by GAAP for complete financial statements. Readers of this quarterly report on Form 10-Q (Quarterly Report) should refer to The Howard Hughes Corporation audited Consolidated Financial Statements, which are included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023 (the Annual Report). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and equity for the interim periods have been included. The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, and future fiscal years.

Principles of Consolidation The consolidated financial statements include the accounts of The Howard Hughes Corporation and its subsidiaries after elimination of intercompany balances and transactions. The Company also consolidates certain variable interest entities (VIEs) in accordance with Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 810 Consolidation. The outside equity interests in certain entities controlled by the Company are reflected in the Condensed Consolidated Financial Statements as noncontrolling interests. HHC’s consolidated financial statements reflect the impacts of the holding company reorganization discussed above on a prospective basis.

Certain amounts in the 2022 Condensed Consolidated Balance Sheet have been reclassified to conform to the current presentation. Specifically, the Company reclassified Net investment in lease receivable and Notes receivable, net to Other assets, net within Total assets.

Management has evaluated for disclosure or recognition all material events occurring subsequent to the date of the Condensed Consolidated Financial Statements up to the date and time this Quarterly Report was filed.

Seaport Entertainment On October 5, 2023, HHH announced the intent to form a new division, Seaport Entertainment, that is expected to include Howard Hughes Corporation’s entertainment-related assets in New York and Las Vegas, including the Seaport in Lower Manhattan and the Las Vegas Aviators Triple-A Minor League Baseball team, as well as the Company’s ownership stake in Jean-Georges Restaurants and an interest in and to 80% of the air rights above the Fashion Show Mall in Las Vegas.

Restricted Cash Restricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to escrowed condominium deposits by buyers and other amounts related to taxes, insurance, and legally restricted security deposits and leasing costs.

~~HHC~~Accounts ~~2023~~Receivable, ~~FORM~~net Accounts 10receivable, net includes straight-~~Q | 8~~line rent receivables, tenant receivables, and other receivables. On a quarterly basis, management reviews the lease-related receivables, including straight-line rent receivables and tenant receivables, for collectability. This analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease-related receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses if the estimated loss amount is probable and can be reasonably estimated.

Other receivables are primarily related to short-term trade receivables. The Company is exposed to credit losses through the sale of goods and services to customers and assesses its exposure to credit loss related to these receivables on a quarterly basis based on historical collection experience and future expectations by portfolio. The Company records an allowance for credit losses if the estimated loss amount is probable.

HHC 2024 FORM 10-Q | 8


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

Accounts Receivable, net Accounts receivable, net includes straight-line rent receivables, tenant receivables, and other receivables. On a quarterly basis, management reviews straight-line rent receivables and tenant receivables for collectability. As required under ASC 842 Leases, this analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses under ASC 450 Contingencies if the estimated loss amount is probable and can be reasonably estimated.

The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Condensed Consolidated Balance Sheets:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Straight-line rent receivables	$	89,~~712~~761	$	8487,~~145~~669
Tenant receivables	53,~~382~~770		124,~~044~~780
Other receivables	1317,~~781~~586		722,~~248~~596
Accounts receivable, net (a)	$	~~108~~111,~~875~~117	$	~~103~~115,~~437~~045

(a)As of ~~September~~March 3031, ~~2023~~2024, the total reserve balance for amounts considered uncollectible was $1115.47 million, comprised of $714.48 million ~~related~~attributable to ~~ASC~~lease-related ~~842~~receivables and $4.0.9 million attributable to the allowance for credit losses related to ~~ASC~~other ~~450~~accounts receivables. As of December 31, ~~2022~~2023, the total reserve balance was $815.90 million, comprised of $314.48 million ~~related~~attributable to ~~ASC~~lease-related ~~842~~receivables ~~and~~ $50.52 million attributable to the allowance for credit losses related to ~~ASC~~other ~~450~~accounts receivables.

The following table summarizes the impacts of the ~~ASC~~collectability ~~842 and ASC 450~~ reserves in the accompanying Condensed Consolidated Statements of Operations:

		Three Months Ended September 30,							Nine Months Ended September 30,
thousands				Three Months Ended March 31,
thousands	Income Statement Location	2023			2022				2023				2022
Income Statement Location							2024				2023
ASC 842 reserve	Rental revenue	$	1,107		$	275			$	5,644			$	(3,762)
Rental revenue							$	960			$	2,893
ASC 450 reserve	Provision for (recovery of) doubtful accounts	1,446			106				(1,000)				2,238
Provision for (recovery of) doubtful accounts							834				(2,420)
Total (income) expense impact		$	~~2,553~~		$	~~381~~	$	1,794	$	~~4,644~~	$	473	$	~~(1,524)~~

Income Taxes HHC is a directly owned subsidiary of HHH and will be included in Howard Hughes Holding Inc. and Subsidiaries’ U.S. Federal income tax return. The Company’s financial statements recognize the current and deferred income tax consequences that result from HHC’s activities during the current period pursuant to the provisions of ASC 740 Income Taxes as if the Company were a separate taxpayer rather than a member of Howard Hughes Holding Inc.’s consolidated income tax return group.

Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, the future cash flows used in impairment analysis and fair value used in impairment calculations, allocation of capitalized development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired, and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, and the fair value of warrants, debt, and options granted. In particular, Master Planned Communities (MPC) cost of sales estimates are highly judgmental as they are sensitive to cost escalation, sales price escalation, and lot absorption, which are subject to judgment and affected by expectations about future market or economic conditions. Actual results could differ from these and other estimates.

~~Noncontrolling~~Consolidated ~~Interests As~~Variable ofInterest ~~September 30,~~Entity At ~~2023, and December~~ March 31, ~~2022~~2024, ~~noncontrolling~~the ~~interests~~Company ~~primarily~~holds ~~related~~an ~~to the 12~~88.0% ~~noncontrolling~~ interest in Teravalis, ~~and~~our ~~the~~newest ~~noncontrolling~~large-scale ~~interest~~master planned community in the ~~Ward~~West ~~Village~~Valley ~~Homeowners’~~of ~~Associations~~Phoenix, ~~(HOAs).~~Arizona, ~~All revenues~~ and ~~expenses~~a ~~related~~third toparty holds the ~~HOAs~~remaining ~~are~~12.0%. ~~attributable~~Teravalis was determined to ~~noncontrolling~~be ~~interests~~a VIE, and doas ~~not~~the ~~impact~~Company ~~net~~has ~~income~~the ~~attributable~~power to ~~common~~direct ~~stockholders.~~the ~~Refer~~activities tothat ~~Note~~most 3significantly -impact ~~Acquisitions~~its ~~and~~economic ~~Dispositions~~performance, ~~for~~the ~~additional~~Company ~~information~~is onconsidered the primary beneficiary and consolidates Teravalis.

~~HHC~~Under ~~2023~~the ~~FORM~~terms 10of the LLC agreement, cash distributions and the recognition of income-~~Q | 9~~producing activities will be pro rata based on economic ownership interest. As of March 31, 2024, the Company’s Condensed Consolidated Balance Sheets include $541.7 million of Master Planned Community assets, $0.4 million of Accounts Payable and other liabilities, and $65.0 million of Noncontrolling interest related to Teravalis.

Noncontrolling Interests As of March 31, 2024, and December 31, 2023, noncontrolling interests related to the 12.0% noncontrolling interest in Teravalis and the noncontrolling interest in the Ward Village Homeowners’ Associations (HOAs). All revenues and expenses related to the HOAs are attributable to noncontrolling interests and do not impact net income attributable to common stockholders.

HHC 2024 FORM 10-Q | 9


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

~~Financial~~Financing ~~Instruments~~Receivable - Credit Losses The Company is exposed to credit losses through the sale of goods and services to the Company’s customers. Receivables held by the Company primarily relate to short-term trade receivables, discussed above, and financing receivables, which include Municipal Utility District (MUD) receivables, Special Improvement District (SID) bonds, Tax Increment Financing (TIF) receivables, net investments in lease receivables, and notes receivable. The Company assesses its exposure to credit loss based on historical collection experience and future expectations by portfolio segment. Historical collection experience is evaluated on a quarterly basis by the Company.

The amortized cost basis of financing receivables, consisting primarily of MUD receivables, totaled $~~658~~663.5 million as of ~~September~~March 3031, ~~2023~~2024, and $~~545~~632.48 million as of December 31, ~~2022~~2023. The MUD receivable balance included accrued interest of $5143.40 million as of ~~September~~March 3031, ~~2023~~2024, and $3635.48 million as of December 31, ~~2022~~2023. There has been no material activity in the allowance for credit losses for financing receivables for the ~~nine~~three months ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023.

Financing receivables are considered to be past due once they are 30 days contractually past due under the terms of the agreement. The Company does not have significant receivables that are past due or on nonaccrual status. There have been no significant write-offs or recoveries of amounts previously written off during the current period for financing receivables.

Recently Issued Accounting Standards The following is a summary of recently issued accounting pronouncements which relate to the Company’s business.

ASU 2020-04, Reference Rate Reform When certain conditions are met, the amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this Update were initially effective as of March 12, 2020, through December 31, 2022. On December 21, 2022, the FASB issued Accounting Standards Update (ASU) 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period entities can utilize the reference rate reform relief guidance under ASU 2020-04, from December 31, 2022, to December 31, 2024. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedge transactions will be based matches the index on the corresponding derivatives. The application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur through the effective date of December 31, 2024.

HHC 2023 FORM 10-Q | 10

FINANCIAL STATEMENTSFOOTNOTES Table of Contents


2. Investments in Unconsolidated Ventures

In the ordinary course of business, the Company enters into partnerships and ventures with an emphasis on investments associated with the development and operation of real estate assets. As of ~~September~~March 3031, ~~2023~~2024, the Company does not consolidate the investments below as it does not have a controlling financial interest in these investments. As such, the Company primarily reports its interests in accordance with the equity method. As of ~~September~~March 3031, ~~2023~~2024, these ventures had ~~financings~~debt totaling $~~259~~291.91 million, with the Company’s proportionate share of this debt totaling $~~128~~144.62 million. All of this indebtedness is without recourse to the Company, with the exception of the collateral maintenance obligation for Floreo. See Note 9 - Commitments and Contingencies for additional information related to the Company’s collateral maintenance obligation.

Investments in unconsolidated ventures consist of the following:

	Ownership Interest (a)				Carrying Value				~~Share of Earnings/Dividends~~				Share of Earnings/Dividends
	September 30,		December 31,		September 30,		December 31,		Three Months Ended September 30,				Nine Months Ended September 30,
	March 31,		December 31,		March 31,		December 31,				Three Months Ended March 31,
thousands except percentages	~~2023~~2024		~~2022~~2023		~~2023~~2024		~~2022~~2023		~~2023~~		~~2022~~		~~2023~~2024		~~2022~~2023
Equity Method Investments
Operating Assets:
110 North Wacker	—	%	—	%	$	—	$	—	$	—	$	—	$	—	$	4,914
The Metropolitan (b)	50	%	50	%	$	—	$	—					$	1,078	$	(325)
The Metropolitan Downtown Columbia (b)	50	%	50	%	—		—		327		1,568		717		4,516
Stewart Title of Montgomery County, TX	50	%	50	%	3,711		3,785						(75)		(35)
Stewart Title of Montgomery County, TX	50	%	50	%	3,799		4,217		126		136		182		848
Woodlands Sarofim	20	%	20	%	2,991		2,990						2		13
Woodlands Sarofim #1	20	%	20	%	3,016		3,029		(33)		6		(14)		(9)
TEN.m.flats (c)	50	%	50	%	—		—						1,570		(781)
m.flats/TEN.M (c)	50	%	50	%	—		—		944		2,422		1,393		6,991
Master Planned Communities:
The Summit (d)	50	%	50	%	6143,~~901~~189		4959,~~368~~112		~~14,829~~		~~15,283~~		22(15,~~576~~923)		174,~~635~~630
Floreo (e)	50	%	50	%	5657,~~480~~092		5855,~~001~~880		~~(519)~~		~~(421)~~		(1,~~520)~~212		(~~645~~522)
Seaport:
The Lawn Club (d)	50	%	50	%	23,~~553~~926		21,~~553~~266		—		—		—(453)		—
Ssäm Bar (Momofuku) (d)(e)(f)	50	%	50	%	—		5,551		(5,478)		(216)		(5,981)		(473)
Ssäm Bar (d)(e)	50	%	50	%	—		—						—		(398)
Tin Building by Jean-Georges (d)(e)(f)	65	%	65	%	12,800		6,935		(9,879)		(11,366)		(30,736)		(20,565)
Tin Building by Jean-Georges (d)(e)	65	%	65	%	13,583		11,658						(9,661)		(10,208)
Jean-Georges Restaurants (f)	25	%	25	%	14,046		45,626		(31,262)		309		(31,618)		815
Jean-Georges Restaurants	25	%	25	%	14,370		14,535						(166)		(214)
Strategic Developments:
HHMK Development	50	%	50	%	10		10		—		—		—		—
KR Holdings	50	%	50	%	~~485~~491		~~485~~486		—		~~(18)~~		—5		~~796~~—
West End Alexandria (d)	58	%	58	%	5660,~~711~~291		56,~~617~~757		59		5		9434		675
					211,801		232,392		(30,886)		7,708		(44,907)		14,890
					199,654		206,479						(22,377)		(7,835)
Other equity investments (g)					13,779		13,779		—		—		3,033		4,638
Other equity investments (f)					13,779		13,779						3,242		3,033
Investments in unconsolidated ventures					$	~~225~~213,~~580~~433	$	~~246~~220,~~171~~258	$	~~(30,886)~~	$	~~7,708~~	$	(4119,~~874~~135)	$	19(4,~~528~~802)

(a)Ownership interests presented reflect the Company’s stated ownership interest or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities.

(b)The Metropolitan ~~Downtown Columbia~~ was in a deficit position of $910.45 million at ~~September~~March 3031, ~~2023~~2024, and $910.09 million at December 31, ~~2022~~2023, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets.

~~(c)M.flats/TEN.M~~HHC ~~was~~2024 inFORM ~~a deficit position of $2.2 million at September 30, 2023, and $1.8 million at December 31, 2022, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets.~~10-Q | 10


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

(c)TEN.m.flats was in a deficit position of $4.0 million at March 31, 2024, and $4.7 million at December 31, 2023, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets.

(d)For these equity method investments, various provisions in the venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses, and preferred returns may result in the Company’s economic interest differing from its stated interest or final profit-sharing interest. For these investments, the Company recognizes income or loss based on the venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing interest.

(e)Classified as a VIE; however, the Company is not the primary beneficiary and accounts for its investment in accordance with the equity method. Refer to discussion below for additional information.

(f)~~These~~Other equity investments ~~were~~represent ~~impaired~~investments asnot ~~part~~accounted offor under the ~~Seaport~~equity ~~impairment~~method. ~~recognized~~The inCompany elected the ~~current~~measurement ~~period~~alternative as these investments do not have readily determinable fair values. ~~Refer~~There were no impairments, or upward or downward adjustments to ~~specific~~the ~~investment~~carrying ~~discussion~~amounts ~~below~~of ~~and~~these ~~Note~~securities 4either during current year or cumulatively. As of March 31, 2024, Other equity investments primarily includes $10.0 million of warrants, which represents cash paid by the Company for the option to acquire additional ownership interest in Jean-Georges ~~Impairment~~Restaurants. Refer to discussion below for additional ~~details~~detail.

~~(g)Other~~The ~~equity~~Lawn ~~investments~~Club In ~~represent~~2021, ~~investments~~the ~~not~~Company ~~accounted~~formed ~~for~~HHC ~~under~~Lawn ~~the~~Games, ~~equity~~LLC ~~method.~~with The ~~Company~~Lawn ~~elected~~Club ~~the~~NYC, ~~measurement~~LLC ~~alternative~~(Endorphin asVentures), ~~these~~to ~~investments~~construct doand ~~not~~operate ~~have~~an ~~readily~~immersive ~~determinable~~indoor ~~fair~~and ~~values.~~outdoor ~~There~~restaurant ~~were~~that noincludes ~~impairments,~~an orextensive ~~upward~~area orof ~~downward~~indoor ~~adjustments~~grass, toa ~~the~~stylish ~~carrying~~clubhouse ~~amounts~~bar, and a wide variety of ~~these~~lawn ~~securities~~games. ~~either~~This ~~during~~concept ~~current~~opened ~~year~~in orthe ~~cumulatively~~fourth quarter of 2023. AsUnder the terms of ~~September 30~~the initial agreement, ~~2023~~the Company funded 80% of the cost to construct the restaurant, ~~Other~~and ~~equity~~Endorphin ~~investments~~Ventures ~~primarily~~contributed ~~includes~~the ~~$10~~remaining 20%.0 ~~million~~In ofOctober ~~warrants~~2023, ~~which~~the ~~represents~~members ~~cash~~executed ~~paid~~an byamended ~~the~~LLC ~~Company~~agreement, ~~for~~in which the ~~option~~Company towill ~~acquire~~fund ~~additional~~90% ~~ownership~~of ~~interest~~any inremaining ~~Jean-Georges~~capital ~~Restaurants.~~requirements, ~~Refer~~and toEndorphin ~~discussion~~Ventures ~~below~~will ~~for~~contribute ~~additional~~the ~~details~~remaining 10%.

The Company will recognize its share of income or loss based on the joint venture distribution priorities, as amended, which could fluctuate over time. Upon return of each member’s contributed capital and a preferred return to HHC, ~~2023~~distributions ~~FORM~~and 10recognition of income or loss will be allocated to the Company based on its final profit-~~Q | 11~~sharing interest. The Company also entered into a lease agreement with HHC Lawn Games, LLC to lease 20,000 square feet of the Fulton Market Building for this venture.

~~FINANCIAL~~Ssäm ~~STATEMENTSFOOTNOTES~~Bar In ~~Table~~2016, the Company formed Pier 17 Restaurant C101, LLC (Ssäm Bar) with MomoPier, LLC (Momofuku) to construct and operate a restaurant and bar at Pier 17 in the Seaport, which opened in 2019. The Company recognized its share of ~~Contents~~income or loss based on the joint venture’s distribution priorities, which could fluctuate over time. During the third quarter of 2023, the Ssäm Bar restaurant closed, and the Company and Momofuku are in the process of dissolving the venture.

110 North Wacker The Company formed a partnership with a local developer (the Partnership) in 2017. In 2018, the Partnership executed an agreement with USAA related to 110 North Wacker to construct and operate the building at 110 North Wacker through a separate legal entity (the Venture).

In March 2022, the Partnership completed the sale of its ownership interest in the Venture for a gross sales price of $208.6 million. Upon sale, the Company recognized income of $5.0 million in Equity in earnings (losses) from unconsolidated ventures on the Condensed Consolidated Statements of Operations, inclusive of the impact of related transaction costs and net fair value gains that were reclassed out of Accumulated other comprehensive income (loss) associated with the Venture’s derivative instruments. Based upon the Partnership’s waterfall, $168.9 million of the net sales proceeds were allocated to the Company with the remaining $22.1 million distributed to the local developer.

The Lawn Club In 2021, the Company formed HHC Lawn Games, LLC with The Lawn Club NYC, LLC (Endorphin Ventures), to construct and operate an immersive indoor and outdoor restaurant that includes an extensive area of indoor grass, a stylish clubhouse bar, and a wide variety of lawn games. This concept is expected to open in the fourth quarter of 2023. Under the terms of the initial agreement, the Company funded 80% of the cost to construct the restaurant, and Endorphin Ventures contributed the remaining 20%. In October 2023, the members executed an amended LLC agreement, in which the Company will fund 90% of any remaining capital requirements, and Endorphin Ventures will contribute 10%.

The Company will recognize its share of income or loss based on the joint venture distribution priorities, as amended, which could fluctuate over time. Upon return of each member’s contributed capital and a preferred return to HHC, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest. The Company also entered into a lease agreement with HHC Lawn Games, LLC to lease over 20,000 square feet of the Fulton Market Building for this venture.

Ssäm Bar In 2016, the Company formed Pier 17 Restaurant C101, LLC (Ssäm Bar) with MomoPier, LLC (Momofuku) to construct and operate a restaurant and bar at Pier 17 in the Seaport, which opened in 2019. The Company recognized its share of income or loss based on the joint venture’s distribution priorities, which could fluctuate over time. During the third quarter of 2023, the Ssäm Bar restaurant closed, and the Company and Momofuku are in the process of dissolving the venture. Additionally, the Company recognized an impairment of $5.0 million related to this investment in the current period. See Note 4 - Impairment for additional details.

Tin Building by Jean-Georges In 2015, the Company, together with VS-Fulton Seafood Market, LLC (Fulton Partner), formed Fulton Seafood Market, LLC (Tin Building by Jean-Georges) to operate a 53,783 square-foot culinary marketplace in the historic Tin Building. The Fulton Partner is a wholly owned subsidiary of Jean-Georges Restaurants. The Company purchased a 25% interest in Jean-George Restaurants in March 2022 as discussed below.

The Company owns 100% of the Tin Building and leased 100% of the space to the Tin Building by Jean-Georges joint venture. Throughout this report, references to the Tin Building relate to the Company’s 100% owned landlord operations and references to the Tin Building by Jean-Georges refer to the managed business in which the Company has an equity ownership interest. The Company, as landlord, funded 100% of the development and construction of the Tin Building. Under the terms of the Tin Building by Jean-Georges LLC agreement, the Company contributes the cash necessary to fund pre-opening, opening, and operating costs of ~~Fulton~~the ~~Seafood~~Tin ~~Market~~Building ~~LLC~~by Jean-Georges. The Fulton Partner is not required to make any capital contributions. The Tin Building was completed and placed in service during the third quarter of 2022 and the Tin Building by Jean-Georges culinary marketplace began operations in the third quarter of 2022. Based on capital contribution and distribution provisions for the Tin Building by Jean-Georges, the Company currently receives substantially all of the economic interest in the venture. Upon return of the Company’s contributed capital and a preferred return, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest.

As of ~~September~~March 3031, ~~2023~~2024, the Tin Building by Jean-Georges is classified as a VIE because the equity holders, as a group, lack the characteristics of a controlling financial interest. The Company further concluded that it is not the primary beneficiary of the VIE as it does not have the power to direct the restaurant-related activities that most significantly impact its economic performance. As the Company is unable to quantify the amount of ~~future~~additional capital contributions that may be funded in the future associated with this investment, the Company’s maximum exposure to loss isas ~~currently~~of March 31, 2024, is equal to the $1213.86 million carrying value of the investment as of ~~September 30,~~that ~~2023~~date. The Company funded capital contributions of $3611.6 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, and $4348.1 million for the year ended December 31, ~~2022~~2023.

~~The~~HHC ~~Company~~2024 ~~recognized~~FORM ~~an impairment of $1.2 million related to this investment in the current period. See Note 4~~ 10- ~~Impairment for additional details.~~Q | 11

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Jean-Georges Restaurants In March 2022, the Company acquired a 25% interest in JG Restaurant HoldCo LLC (Jean-Georges Restaurants) for $45.0 million from JG TopCo LLC (Jean-Georges). Jean-Georges Restaurants currently has over 40 hospitality offerings and a pipeline of new concepts. The Company accounts for its ownership interest in accordance with the equity method ~~and recorded its initial investment at cost, inclusive of legal fees and transaction costs~~. Under the terms of the agreement, all cash distributions and the recognition of income-producing activities will be pro rata based on stated ownership interest. ~~The Company recognized an impairment of $30.8 million related to this investment in the current period. See Note 4 - Impairment for additional details.~~

Concurrent with the Company’s acquisition of the 25% interest in Jean-Georges Restaurants, the Company entered into a warrant agreement with Jean-Georges. The Company paid $10.0 million for the option to acquire up to an additional 20% interest in Jean-Georges Restaurants at a fixed exercise price per share subject to certain anti-dilution provisions. Should the warrant agreement be exercised by the Company, the $10.0 million will be credited against the aggregate exercise price of the warrants. Per the agreement, the $10.0 million is to be used for working capital of Jean-Georges Restaurants. The warrant became exercisable on March 2, 2022, subject to automatic exercise in the event of dissolution or liquidation, and will expire on March 2, 2026. As of ~~September~~March 3031, ~~2023~~2024, this warrant had not been exercised. The Company elected the measurement alternative for this purchase option as the equity security does not have a readily determinable fair value. As such, the investment is measured at cost, less any identified impairment charges.

Creative Culinary Management Company, LLC (CCMC), a wholly owned subsidiary of Jean-Georges Restaurants, provides management services for certain retail and food and beverage businesses that the Company owns, either wholly or through partnerships with third parties. The Company’s businesses managed by CCMC include the Tin Building by Jean-Georges, The Fulton, and Malibu Farm. Additionally, in October 2023, the Lawn Club venture executed a management agreement with CCMC. Pursuant to the various management agreements, CCMC is responsible for employment and supervision of all employees providing services for the food and beverage operations and restaurant as well as the day-to-day operations and accounting for the food and beverage operations.

The Summit In 2015, the Company formed DLV/HHPI Summerlin, LLC (The Summit) with Discovery Land Company (Discovery) to develop a custom home community in Summerlin.

Phase I The Company contributed land with a carrying value of $13.4 million and transferred SID bonds related to such land with a carrying value of $1.3 million to The Summit at the agreed upon capital contribution value of $125.4 million, or $226,000 per acre, and has no further capital obligations. Discovery is required to fund up to a maximum of $30.0 million of cash as their capital contribution, of which $3.8 million has been contributed. The ~~gains on the contributed land are recognized in Equity in earnings (losses) from unconsolidated ventures as The Summit sells lots. The~~ Company has received its preferred return distributions and recognizes its share of income or loss for Phase I based on its final profit-sharing interest.

Phase II In July 2022, the Company contributed an additional 54 acres to The Summit (Phase II land) with a fair value of $21.5 million. The Company recognized an incremental equity method investment at fair value and recognized a gain of $13.5 million recorded in Equity in earnings (losses) from unconsolidated ventures. This gain is the result of marking the cost basis of the land contributed to its estimated fair value at the time of contribution. The Phase II land is adjacent to the existing Summit development and includes approximately 28 custom home sites. The first lot sales closed in the first quarter of 2023. The Company will receive distributions and recognize its share of income or loss for Phase II based on the joint venture’s distribution priorities in the amended Summit LLC agreement, which could fluctuate over time. Upon receipt of the Company’s preferred returns, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest.

Floreo In the fourth quarter of 2021, simultaneous with the Teravalis land acquisition, the Company closed on the acquisition of a 50% interest in Trillium Development Holding Company, LLC (Floreo) for $59.0 million and entered into a Limited Liability Company Agreement (LLC Agreement) with JDM Partners and El Dorado Holdings to develop Floreo, the first village within the new Teravalis MPC, on 3,029 acres of land in the greater Phoenix, Arizona area. The first ~~Floreo~~ land sales ~~are~~closed ~~expected to occur~~ in the ~~fourth~~first quarter of ~~2023 subject to market conditions~~2024.

~~HHC~~In ~~2023~~October ~~FORM~~2022, 10Floreo closed on a $165.0 million financing, with outstanding borrowings of $96.1 million as of March 31, 2024. The Company provided a guarantee on this financing in the form of a collateral maintenance obligation and received a guarantee fee of $5.0 million. The financing and related guarantee provided by the Company triggered a reconsideration event and as of December 31, 2022, Floreo was classified as a VIE. Due to rights held by other members, the Company does not have a controlling financial interest in Floreo and is not the primary beneficiary. As of March 31, 2024, the Company’s maximum exposure to loss on this investment is limited to the $57.1 million aggregate carrying value as the Company has not made any other firm commitments to fund amounts on behalf of this VIE, and cash collateral that the Company may be obligated to post related to its collateral maintenance obligation. See Note 9 -~~Q | 13~~ Commitments and Contingencies for additional information related to the Company’s collateral maintenance obligation.

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FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

In October 2022, Floreo closed on a $165.0 million financing, with outstanding borrowings of $65.4 million as of September 30, 2023. The Company provided a guarantee on this financing in the form of a collateral maintenance obligation and received a guarantee fee of $5.0 million. The financing and related guarantee provided by the Company triggered a reconsideration event and as of December 31, 2022, Floreo was classified as a VIE. Due to rights held by other members, the Company does not have a controlling financial interest in Floreo and is not the primary beneficiary. As of September 30, 2023, the Company’s maximum exposure to loss on this investment is limited to the $56.5 million aggregate carrying value as the Company has not made any other firm commitments to fund amounts on behalf of this VIE. See Note 9 - Commitments and Contingencies for additional information related to the Company’s collateral maintenance obligation.

West End Alexandria In the fourth quarter of 2021, the Company entered into an Asset Contribution Agreement with Landmark Land Holdings, LLC (West End Alexandria) to redevelop a 52-acre site previously known as Landmark Mall. Other equity owners include Foulger-Pratt Development, LLC (Foulger-Pratt) and Seritage SRC Finance (Seritage). The Company conveyed its 33-acre Landmark Mall property with an agreed upon fair value of $56.0 million and Seritage conveyed an additional 19 acres of land with an agreed upon fair value of $30.0 million to West End Alexandria in exchange for equity interest. Additionally, Foulger-Pratt agreed to contribute $10.0 million to West End Alexandria. Also in the fourth quarter of 2021, West End Alexandria executed a Purchase and Sale Agreement with the City of Alexandria to sell approximately 11 acres to the City of Alexandria. The City will lease this land to Inova Health Care Services for construction of a new hospital.

Development plans for the remaining 41-acre property include approximately four million square feet of residential, retail, commercial, and entertainment offerings integrated into a cohesive neighborhood with a central plaza, a network of parks and public transportation. Foulger-Pratt will manage construction of the development. Demolition began in the second quarter of 2022 and was completed in 2023, with completion of ~~the~~infrastructure ~~first~~work ~~buildings~~ expected in 2025.

The Company does not have the ability to control the activities that most impact the economic performance of the venture as Foulger-Pratt is the managing member and manages all development activities. As such, the Company accounts for its ownership interest in accordance with the equity method.


3. Acquisitions and Dispositions

Acquisitions In May 2023, the Company acquired the Grogan’s Mill Village Center and related anchor site, a retail property in The Woodlands, Texas consisting of approximately 8.7 acres for $5.9 million in an asset acquisition. The property is being held in the Strategic Developments segment.

In March 2022, the Company acquired a 25% interest in Jean-Georges Restaurants for $45.0 million and paid $10.0 million for the option to acquire up to an additional 20% interest in Jean-Georges Restaurants through March 2026. Jean-Georges Restaurants currently has over 40 hospitality offerings and a pipeline of new concepts. See Note 2 - Investments in Unconsolidated Ventures for additional information.

Teravalis In October 2021, the Company acquired Teravalis, a new large-scale master planned community in the West Valley of Phoenix, Arizona. The Company closed on the all-cash purchase of approximately 33,810 acres (Teravalis Property) for a purchase price of $541.0 million. The executed purchase and sale agreement included a repurchase option that allowed the seller, or permitted assignee, to repurchase up to 50% interest in the Teravalis Property within a set term. In June 2022, the seller’s assignee, JDM Member, exercised a minimum purchase option and purchased a 9.24% interest in the Teravalis Property for $50.0 million. Additionally, in August 2022, JDM Member purchased an additional 2.78% interest in the Teravalis Property for $15.0 million, after which the remaining repurchase option expired.

Following the execution of the minimum purchase option, the Company entered into a Limited Liability Company Agreement (LLC Agreement) with JDM Member to form Douglas Ranch Development Holding Company (Teravalis). The Company and JDM Member then contributed their interests in the Teravalis Property to Teravalis in exchange for an equity interest. At September 30, 2023, the Company holds 88.0% of the Teravalis interests and JDM Member holds the remaining 12.0%. Teravalis was determined to be a VIE, and as the Company has the power to direct the activities that most significantly impact its economic performance, the Company is considered the primary beneficiary and continues to consolidate Teravalis.

HHC 2023 FORM 10-Q | 14

FINANCIAL STATEMENTSFOOTNOTES Table of Contents

Under the terms of the LLC agreement, cash distributions and the recognition of income-producing activities will be pro rata based on economic ownership interest. As of September 30, 2023, the Company’s Condensed Consolidated Balance Sheets include $541.4 million of Master Planned Community assets, $0.3 million of Accounts Payable and other liabilities, and $65.0 million of Noncontrolling interest related to Teravalis.

Floreo Simultaneous with the Teravalis land acquisition, the Company closed on the acquisition of a 50% interest in Trillium Development Holding Company, LLC (Floreo), for $59.0 million. Floreo owns approximately 3,029 acres of land which will be the first village developed within the Teravalis community in the greater Phoenix, Arizona area. See Note 2 - Investments in Unconsolidated Ventures for additional information.

Dispositions Gains and losses on asset dispositions are recorded to Gain (loss) on sale or disposal of real estate and other assets, net in the Condensed Consolidated Statements of Operations, unless otherwise noted.

Operating Assets OnIn ~~July 6,~~February ~~2023~~2024, the Company completed the sale of ~~two~~Creekside ~~self-storage~~Park ~~facilities~~Medical ~~with~~Plaza, a ~~total~~32,689 ofsquare-foot ~~1,370~~medical ~~storage~~office ~~units~~building in The Woodlands, Texas, for $3014.50 million, resulting in a gain of $164.18 million.

OnIn ~~March 31,~~December 2023, the Company completed the sale of ~~two~~Memorial ~~land~~Hermann ~~parcels~~Medical ~~in Honolulu~~Office, ~~Hawai‘i,~~a ~~including an 11~~20,~~929-~~000 square-foot ~~building~~medical atoffice ~~the~~building ~~Ward~~in ~~Village~~The ~~Retail~~Woodlands, ~~property~~Texas, for ~~total consideration of~~ $69.3 6 million, resulting in a gain of $43.7 2 million.

OnIn ~~December 30,~~July ~~2022~~2023, the Company completed the sale of ~~Creekside~~two ~~Village~~self-storage ~~Green,~~facilities with a 74total of 1,~~670-square-foot~~370 ~~retail~~storage ~~property~~units in The Woodlands, Texas, for $2830.4 5 million, resulting in a gain of $1316.4 1 million.

OnIn ~~December 21,~~March ~~2022~~2023, the Company completed the sale of ~~Lake~~two ~~Woodlands~~land ~~Crossing~~parcels in Honolulu, aHawai‘i, 60including an 11,~~261~~929-square-foot ~~retail~~building ~~property~~at inthe ~~The~~Ward ~~Woodlands,~~Village ~~Texas~~Retail property, for total consideration of $226.53 million, resulting in a gain of $124.27 million. ~~The Company retained the underlying land and simultaneously with the sale executed a 99-year ground lease with the buyer, which is classified as an operating lease.~~

OnHHC ~~June 16,~~2024 ~~2022,~~FORM ~~the Company completed the sale of the Outlet Collection at Riverwalk, a 264,080~~10-~~square-foot outlet center located in downtown New Orleans, Louisiana, for $34.0 million resulting in a gain on sale of $4.0 million, inclusive of $0.5 million in related transaction costs.~~Q | 13

On March 30, 2022, the Company completed the sale of its ownership interest in 110 North Wacker for $208.6 million. See Note 2 - Investments in Unconsolidated Ventures for additional information.

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FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


4. Impairment

The Company reviews its long-lived assets for potential impairment indicators ~~whenever~~when events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment or disposal of long‑lived assets in accordance with ASC 360 requires that if impairment indicators exist and expected undiscounted cash flows generated by the asset over an anticipated holding period are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above- or below-market rate of return. No impairment charges were recorded during the three months ended March 31, 2024 and 2023.

The Company periodically evaluates ~~each~~strategic ~~investment~~alternatives inwith anrespect ~~unconsolidated~~to ~~venture~~each ~~discussed~~property inand ~~Note~~may 2revise -the ~~Investments~~strategy infrom ~~Unconsolidated~~time ~~Ventures~~to ~~periodically~~time, ~~for~~including ~~recoverability~~the ~~and~~intent ~~valuation~~to ~~declines~~hold ~~that~~the ~~are~~asset ~~other~~on a long-~~than-temporary~~term basis or the timing of potential asset dispositions. IfFor example, the ~~decrease~~Company inmay ~~value~~decide ofto ansell ~~investment~~property that is ~~deemed~~held tofor use, and the sale price may be ~~other-~~less than~~-temporary,~~ the ~~investment~~carrying isamount. ~~reduced~~As toa ~~its~~result, ~~estimated~~changes ~~fair~~in ~~value~~strategy could result in impairment charges in future periods.

~~During~~The ~~the third quarter of 2023, the~~ Company ~~recorded~~evaluates aeach ~~$709.5~~investment ~~million~~in ~~impairment~~an ~~charge~~unconsolidated ~~related~~venture todiscussed ~~the~~in ~~Seaport~~Note ~~segment.~~2 ~~The~~- ~~Company~~Investments ~~recognized the impairment due to decreases~~ in ~~estimated~~Unconsolidated ~~future~~Ventures ~~cash~~periodically ~~flows~~for ~~due~~recoverability toand ~~significant~~valuation ~~uncertainty~~declines ofthat ~~future performance as stabilization and profitability~~ are ~~taking longer~~ other-than-temporary. ~~expected,~~If ~~pressure on~~ the ~~current~~decrease ~~cost~~in ~~structure,~~value ~~decreased~~of ~~demand for office space, as well as~~ an ~~increase~~investment inis ~~the~~deemed ~~capitalization rate and a decrease in restaurant multiples used~~ to ~~evaluate~~be ~~future~~other-than-temporary, ~~cash~~the ~~flows.~~investment ~~The~~is ~~Company~~reduced ~~used a discounted cash flow analysis~~ to ~~determine~~its estimated fair value,. ~~with~~No ~~capitalization~~impairment ~~rates~~charges ~~ranging~~were ~~from~~recorded ~~6.5%~~during tothe ~~6.75%,~~three ~~discount~~months ~~rates~~ended ~~ranging~~March ~~from 9.5% to 13.3%~~31, 2024 and ~~restaurant multiples ranging from 8~~2023.~~3 to 11.8.~~

The assumptions and estimates included in the Company’s impairment analysis require significant judgment about future events, market conditions, and financial performance. Actual results may differ from these assumptions. There can be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future. Additional adjustments may be recorded for subsequent revisions in estimated fair value.

The following table summarizes the pre-tax impacts of the Seaport impairment mentioned above to the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023.

thousands	Statements of Operations Line Item	Three and Nine Months Ended September 30, 2023
Seaport Segment
Buildings and equipment	Provision for impairment	$	450,944
Land	Provision for impairment	11,106
Developments	Provision for impairment	210,442
Net investment in real estate		$	672,492
Investments in unconsolidated ventures	Equity in earnings (losses) from unconsolidated ventures	$	37,001
Total Impairment		$	709,493

No impairment charges were recorded during the three and nine months ended September 30, 2022.

HHC 2023 FORM 10-Q | 16

FINANCIAL STATEMENTSFOOTNOTES Table of Contents


5. Other Assets and Liabilities

Other Assets, Net The following table summarizes the significant components of ~~other~~Other assets, net:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Security, escrow, and other deposits	$	8183,~~751~~708	$	4881,~~578~~891
Special Improvement District receivable, net	5975,~~433~~447		6474,~~091~~899
In-place leases, net	3634,~~534~~447		3935,~~696~~490
Prepaid expenses	27,237		18,806
Intangibles, net	21,076		21,894
Interest rate derivative assets	22,886		30,860
Other	18,034		17,857
Intangibles, net	22,713		25,170
Interest rate derivative assets	14,856		10,318
Tenant incentives and other receivables, net	9,447		8,252
Prepaid expenses	13,789		16,984
Other	7,945		12,555
Tenant incentives and other receivables, net	11,301		10,840
TIF receivable, net	3,~~001~~807		16,~~893~~371
Net investment in lease receivable	2,~~885~~823		2,~~895~~883
Notes receivable, net	1,~~883~~088		31,~~339~~558
Condominium inventory	~~670~~562		~~22,452~~671
Other assets, net	$	~~276~~280,~~385~~938	$	~~278~~281,~~587~~656

Accounts Payable and Other Liabilities The following table summarizes the significant components of Accounts payable and other liabilities:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Condominium deposit liabilities	$	~~472~~528,~~169~~536	$	~~390~~478,~~253~~870
Construction payables	~~256~~297,~~833~~086		~~260,~~257,227
Deferred income	82112,~~472~~608		85118,~~006~~432
Accrued real estate taxes	44,443		37,835
Tenant and other deposits	45,165		29,976
Tenant and other deposits	38,560		26,100
Accounts payable and accrued expenses	35,935		49,337
Accrued interest	2930,~~631~~305		4954,~~156~~301
Accounts payable and accrued expenses	28,147		36,174
Accrued real estate taxes	23,477		30,096
Other	2719,~~500~~534		2824,~~856~~461
Accrued payroll and other employee liabilities	2413,~~113~~336		3032,~~874~~046
Accounts payable and other liabilities	$	1,~~003~~105,~~868~~982	$	~~944~~1,~~511~~074,746

HHC ~~2023~~2024 FORM 10-Q | 1714


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


6. Mortgages, Notes, and Loans Payable, Net

Mortgages, Notes, and Loans Payable, Net Mortgages, notes, and loans payable, net are summarized as follows:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Fixed-rate debt
Senior unsecured notes	$	2,050,000	$	2,050,000
Secured mortgages payable	1,~~492~~482,~~580~~958		1,~~500~~485,~~841~~494
Special Improvement District bonds	5564,~~380~~928		5965,~~777~~627
Variable-rate debt (a)
Secured Bridgeland Notes	475,000		~~275~~475,000
Secured mortgages payable	1,~~174~~365,~~574~~049		~~916~~1,~~570~~276,489
Unamortized deferred financing costs (b)	(5146,~~534~~692)		(5549,~~005~~990)
Mortgages, notes, and loans payable, net	$	5,~~196~~391,~~000~~243	$	45,~~747~~302,~~183~~620

(a)The Company has entered into derivative instruments to manage the variable interest rate exposure. ~~The Company had an interest rate swap and two interest rate caps that expired in the third quarter of 2023.~~ See Note 8 - Derivative Instruments and Hedging Activities for additional information.

(b)Deferred financing costs are amortized to interest expense over the initial contractual term of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).

As of ~~September~~March 3031, ~~2023~~2024, land, buildings and equipment, developments, and other collateral with a net book value of $4.89 billion have been pledged as collateral for the Company’s mortgages, notes, and loans payable.

Senior Unsecured Notes During 2020 and 2021, the Company issued $2.1 billion of aggregate principal of senior unsecured notes. These notes have fixed rates of interest that are payable semi-annually and are interest only until maturity. These debt obligations are redeemable prior to the maturity date subject to a “make-whole” premium which decreases annually until 2026 at which time the redemption make-whole premium is no longer applicable. The following table summarizes the Company’s senior unsecured notes by issuance date:


$ in thousands	Principal		Maturity Date	Interest Rate
August 2020	$	750,000	August 2028	5.375%
February 2021	650,000		February 2029	4.125%
February 2021	650,000		February 2031	4.375%
Senior unsecured notes	$	2,050,000

Secured Mortgages Payable The Company’s outstanding mortgages are collateralized by certain of the Company’s real estate assets. Certain of the Company’s loans contain provisions that grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Certain mortgage notes may be prepaid subject to a prepayment penalty equal to a yield maintenance premium, defeasance, or a percentage of the loan balance. Construction loans related to the Company’s development properties are generally variable-rate, interest-only, and have maturities of five years or less. Debt obligations related to the Company’s operating properties generally require monthly installments of principal and interest ~~over its contractual life~~.

The following table summarizes the Company’s Secured mortgages payable:

	September 30, 2023						December 31, 2022
	March 31, 2024						December 31, 2023
$ in thousands	Principal		Range of Interest Rates	Weighted-average Interest Rate		Weighted-average Years to Maturity	Principal		Range of Interest Rates	Weighted-average Interest Rate		Weighted-average Years to Maturity
Fixed rate (a)	$	1,~~492~~482,~~580~~958	3.13% - 78.67%	4.3946	%	7.30	$	1,~~500~~485,~~841~~494	3.13% - 78.67%	4.3946	%	87.12
Variable rate (b)	1,~~174~~365,~~574~~049		7.0607% - 1310.8741%	8.5975	%	21.59	~~916~~1,~~570~~276,489		67.0508% - 910.3948%	78.3673	%	32.2
Secured mortgages payable	$	2,~~667~~848,~~154~~007	3.13% - 1310.8741%	6.2452	%	54.25	$	2,~~417~~761,~~411~~983	3.13% - 910.3948%	56.5144	%	64.29

(a)Interest rates presented are based upon the coupon rates of the Company’s fixed-rate debt obligations.

(b)Interest rates presented are based on the applicable reference interest rates as of ~~September~~March 3031, ~~2023~~2024, and December 31, ~~2022~~2023, excluding the effects of interest rate derivatives.

HHC ~~2023~~2024 FORM 10-Q | 1815


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

The Company has entered into derivative instruments to manage its variable interest rate exposure. The weighted-average interest rate of the Company’s variable-rate mortgages payable, inclusive of interest rate derivatives, was 78.8604% as of ~~September~~March 3031, ~~2023~~2024, and 57.9198% as of December 31, ~~2022~~2023. See Note 8 - Derivative Instruments and Hedging Activities for additional information.

The Company’s secured mortgages mature over various terms through ~~December~~September ~~2039~~2052. On certain of its debt obligations, the Company has the option to exercise extension options, subject to certain terms, which may include minimum debt service coverage, minimum occupancy levels or condominium sales levels, as applicable, and other performance criteria. In certain cases, due to property performance not meeting identified covenants, the Company may be required to pay down a portion of the loan to exercise the extension option.

During ~~2023~~2024, the Company’s mortgage activity included ~~new borrowings of $115.0 million (excluding undrawn amounts on new construction loans),~~ draws on existing mortgages of $~~244~~89.30 million, and repayments of $~~110~~3.87 million. As of ~~September~~March 3031, ~~2023~~2024, the Company’s secured mortgage loans had $1.10 billion of undrawn lender commitment available to be drawn for property development, subject to certain restrictions.

Special Improvement District Bonds The Summerlin MPC uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to the Company as infrastructure projects are completed, inspected by the municipalities, and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin MPC pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that the Company previously paid with respect to such proportionate share of the bond. These bonds bear interest at fixed rates ranging from 4.13% to 67.0500% with maturities ranging from 2025 to ~~2051~~2053 as of ~~September~~March 3031, ~~2023~~2024. During the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, ~~$3.1 million~~no obligations were assumed by buyers and no SID bonds were issued.

Secured Bridgeland Notes In September 2021, the Company closed on a $275.0 million financing with maturity in 2026. This financing is secured by MUD receivables and land in Bridgeland. The loan required a $27.5 million fully refundable deposit and has an interest rate of 7.62% ~~at September 30, 2023, and 6~~.~~60%~~ at December 31, 2022. Due to the maturity of one of the Company’s interest rate swaps in September 2023, this financing was not covered by an interest rate derivative at September 30, 2023. The interest rate inclusive of interest rate derivatives was 5.28% at December 31, 2022. In December 2022, the borrowing capacity of this obligation was expanded from $275.0 million to $475.0 million. An additional $67.0 million was drawn in the second quarter of 2023 and $133.0 million was drawn in the third quarter of 2023, bringing outstanding borrowings to $475.0 million as of ~~September~~March 3031, ~~2023~~2024.

Debt Compliance As of ~~September~~March 3031, ~~2023~~2024, the Company was in compliance with all property-level debt covenants with the exception of six property-level debt instruments. As a result, the excess net cash flow after debt service from the underlying properties became restricted. While the restricted cash could not be used for general corporate purposes, it could be used to fund operations of the underlying assets and did not have a material impact on the Company’s liquidity or its ability to operate these assets.

AsHHC of2024 ~~September 30,~~FORM ~~2023, the Company was in compliance with all guarantor debt covenants tested as of the last day of each fiscal quarter with the exception of the leverage ratio covenant for an $11.0 million property~~10-level debt instrument. As of September 30, 2023, the Company failed to satisfy the leverage ratio due to the Seaport impairment discussed in Note 4 - Impairment. The financial institution waived the failure.Q | 16

HHC 2023 FORM 10-Q | 19


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


7. Fair Value

ASC 820, Fair Value Measurement, emphasizes that fair value is a market-based measurement that should be determined using assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets or liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the asset or liability. Assets or liabilities with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The following table presents the fair value measurement hierarchy levels required under ASC 820 for the Company’s assets that are measured at fair value on a recurring basis. The Company does not have any liabilities that are measured at a fair value on a recurring basis for the periods presented:.

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Fair Value Measurements Using

thousands

Total

Quoted Prices in Active Markets for Identical Assets(Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs(Level 3)

Total

Quoted Prices in Active Markets for Identical Assets(Level 1)

Significant Other Observable Inputs(Level 2)

Significant Unobservable Inputs(Level 3)

Interest rate derivative assets

2214,~~886~~856

—

2214,~~886~~856

—

3010,~~860~~318

—

3010,~~860~~318

—

The fair values of interest rate derivatives are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves.

The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis are as follows:

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

thousands

Fair Value Hierarchy

Carrying Amount

Estimated Fair Value

Carrying Amount

Estimated Fair Value

Assets:

Cash and Restricted cash

Level 1

~~935~~891,~~798~~830

1,~~098~~053,~~937~~057

Accounts receivable, net (a)

Level 3

~~108~~111,~~875~~117

~~103~~115,~~437~~045

Notes receivable, net (b)

Level 3

1,~~883~~088

31,~~339~~558

Liabilities:

Fixed-rate debt (c)

Level 2

3,597,~~960~~886

3,~~033~~264,~~514~~288

3,~~610~~601,~~618~~121

3,~~298~~294,~~859~~431

Variable-rate debt (c)

Level 2

1,~~649~~840,~~574~~049

1,~~191~~751,~~570~~489

(a)Accounts receivable, net is shown net of an allowance of $1115.47 million at ~~September~~March 3031, ~~2023~~2024, and $815.90 million at December 31, ~~2022~~2023. Refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies for additional information on the allowance.

(b)Notes receivable, net is shown net of an immaterial allowance at ~~September~~March 3031, ~~2023~~2024, and December 31, ~~2022~~2023.

(c)Excludes related unamortized financing costs.

The carrying amounts of Cash and Restricted cash, Accounts receivable, net, and Notes receivable, net approximate fair value because of the short‑term maturity of these instruments.

The fair value of the Company’s Senior Notes, included in fixed-rate debt in the table above, is based upon the trade price closest to the end of the period presented. The fair value of other fixed-rate debt in the table above was estimated based on a discounted future cash payment model, which includes risk premiums and risk-free rates derived from the Secured Overnight Financing Rate (SOFR) or U.S. Treasury obligation interest rates as of ~~September~~March 3031, ~~2023~~2024. ~~Please~~Refer ~~refer~~ to Note 6 - Mortgages, Notes, and Loans Payable, Net for additional information. The discount rates reflect the Company’s judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity.

HHC ~~2023~~2024 FORM 10-Q | 2017


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

The carrying amounts for the Company’s variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities.

The below table includes a non-financial asset that was measured at fair value on a non-recurring basis resulting in the property being impaired:


			Fair Value Measurements Using
thousands	Total Fair Value Measurement (a)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2023
Seaport Net investment in real estate	$	321,180	$	—	$	—	$	321,180
Seaport Investments in unconsolidated ventures	40,225		—		—		40,225

(a)The fair value was measured as of the impairment date in the third quarter of 2023 using a discounted cash flow analysis to determine fair value, with capitalization rates ranging from 65.5% to 6.75%, discount rates ranging from 98.5% to 13.3%, and restaurant multiples ranging from 8.3 to 11.8. ~~Refer to Note 4 - Impairment for additional information.~~


8. Derivative Instruments and Hedging Activities

The Company is exposed to interest rate risk related to its variable interest rate debt, and it manages this risk by utilizing interest rate derivatives. The Company uses interest rate swaps, collars, and caps to add stability to interest costs by reducing the Company’s exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company’s fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above an established ceiling rate and payment of variable amounts to a counterparty if interest rates fall below an established floor rate, in exchange for an ~~up‑front~~upfront premium. No payments or receipts are exchanged on interest rate collar contracts unless interest rates rise above or fall below the established ceiling and floor rates. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium. Certain of the Company’s interest rate caps are not currently designated as hedges, and therefore, any gains or losses are recognized in current-period earnings within Interest expense on the Condensed Consolidated Statements of Operations. These derivatives are recorded on a gross basis at fair value on the balance sheet.

Assessments of hedge effectiveness are performed quarterly using regression analysis. The change in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Accumulated other comprehensive income (loss) (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item being hedged. Derivatives accounted for as cash flow hedges are classified in the same category in the Condensed Consolidated Statements of Cash Flows as the items being hedged. Gains and losses from derivative financial instruments are reported in Cash provided by (used in) operating activities within the Condensed Consolidated Statements of Cash Flows.

The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. To mitigate its credit risk, the Company reviews the creditworthiness of counterparties and enters into agreements with those that are considered credit-worthy, such as large financial institutions with favorable credit ratings. There were no derivative counterparty defaults as of ~~September~~March 3031, ~~2023~~2024, or as of December 31, ~~2022~~2023.

If the derivative contracts are terminated prior to their maturity, the amounts previously recorded in AOCI are recognized in earnings over the period that the hedged transaction impacts earnings. ~~During the nine months ended September 30, 2023, and the year ended December 31, 2022, there were no termination events.~~ The Company recorded an immaterial reduction in ~~Interest~~interest expense in ~~2022~~2023 and ~~2023~~2024 related to the amortization of ~~a previously~~ terminated ~~swap~~swaps.

Amounts reported in AOCI related to derivatives will be reclassified to Interest expense as interest payments are made on the Company’s variable‑rate debt. Over the next 12 months, the Company estimates that $6.4.3 million of net gain will be reclassified to Interest expense including amounts related to the amortization of terminated swaps.

HHC ~~2023~~2024 FORM 10-Q | 2118


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

The following table summarizes certain terms of the Company’s derivative contracts. The Company reports derivative assets in Other assets, net and derivative liabilities in Accounts payable and other liabilities.

							Fair Value Asset (Liability)
thousands	Notional Amount		Fixed Interest Rate (a)		Effective Date	Maturity Date	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Derivative instruments not designated as hedging instruments: (b)
Interest rate cap	$75,000	~~285,000~~	2.0050	%	310/12/2021	9/1529/~~2023~~2025	$	—2,404	$	52,~~748~~274
Interest rate cap	8359,~~200~~500		2.0050	%	310/12/2021	9/1529/~~2023~~2025	—1,907		1,~~677~~804
Interest rate cap	75,000		2.50	%	10/12/2021	9/29/2025	3,525		3,791
Interest rate collar	55,615		2.00% - 4.50%		6/1/2023	6/1/2025	770		417
Interest rate cap	59,500		2.50	%	10/12/2021	9/29/2025	2,796		3,007
Interest rate collar	63,031		2.00% - 4.50%		6/1/2023	6/1/2025	903		440
Interest rate collar	51,072		2.00% - 4.50%		6/1/2023	6/1/2025	1,356		—
Interest rate collar	31,503		2.00% - 4.50%		6/1/2023	6/1/2025	1,505		—
Derivative instruments designated as hedging instruments:
Interest rate swap	$	615,000	2.98	%	9/21/2018	9/18/2023	$	—	$	8,262
Interest rate swap (c)	175,000		3.69	%	1/3/2023	1/1/2027	2,500		117
Interest rate swap	200,000		3.69	%	1/3/2023	1/1/2027	4,862		978
Interest rate cap	127,000		5.50	%	11/10/2022	11/7/2024	14		28
Interest rate cap	~~127~~73,~~000~~900		5.5000	%	1112/1022/2022	1112/721/~~2024~~2025	~~268~~242		~~378~~223
Interest rate cap	75,000		5.00	%	12/22/2022	12/21/2025	725		655
Interest rate swap	40,800		1.68	%	3/1/2022	2/18/2027	2,878		2,496
Interest rate swap	4034,~~800~~744		14.6889	%	311/1/~~2022~~2019	21/181/~~2027~~2032	3,~~628~~238		32,~~321~~519
Interest rate swap	34,970		4.89	%	11/1/2019	1/1/2032	4,221		3,043
Total fair value derivative assets							$	14,856	$	10,318
Total fair value derivative assets							$	22,886	$	30,860

(a)These rates represent the swap rate and cap strike rate on the Company’s interest rate swaps, caps, and collars.

(b)Interest income related to these contracts was $12.52 million for the three months ended ~~September~~March 3031, ~~2023~~2024, and $34.62 million for the ~~nine~~three months ended ~~September~~March 3031, 2023~~, and interest income was $5~~.~~9 million for the three months ended September 30, 2022, and $14.1 million for the nine months ended September 30, 2022.~~

~~The~~(c)In ~~tables below present~~ the ~~effect~~first quarter of 2024, the Company’s ~~derivative~~terminated ~~financial~~a ~~instruments~~portion ~~on the Condensed Consolidated Statements~~ of ~~Operations~~this ~~for~~swap, reducing the ~~three~~notional ~~and~~amount ~~nine~~from ~~months~~$200.0 million ~~ended~~to ~~September 30, 2023 and 2022:~~$175.0 million.

	Amount of Gain (Loss) Recognized in AOCI on Derivatives
Derivatives in Cash Flow Hedging Relationships	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2023		2022		2023		2022
Interest rate derivatives	$	5,420	$	6,794	$	9,055	$	24,355

The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023:

Location of Gain (Loss) Reclassified from AOCI into Statements of Operations	Amount of Gain (Loss) Reclassified from AOCI into Statements of Operations
	Amount of Gain (Loss) Recognized in AOCI on Derivatives
	Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships	Three Months Ended March 31,
thousands	~~2023~~2024		~~2022~~2023		~~2023~~		~~2022~~
Interest expense	$	5,602	$	(728)	$	11,819	$	(6,709)
Interest rate derivatives	$	3,830	$	(2,651)

Credit-risk-related Contingent Features The Company has agreements at the property level with certain derivative counterparties that contain a provision where if the Company defaults on the related property level indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its related derivative obligations. The Company also has agreements at the property level with certain derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. None of the Company’s derivatives which contain credit-risk-related features were in a net liability position as of September 30, 2023.


Location of Gain (Loss) Reclassified from AOCI into Statements of Operations	Amount of Gain (Loss) Reclassified from AOCI into Statements of Operations
	Three Months Ended March 31,
thousands	2024		2023
Interest expense	$	1,205	$	2,679

~~HHC~~Credit-risk-related ~~2023~~Contingent ~~FORM~~Features The 10Company has agreements at the property level with certain derivative counterparties that contain a provision where if the Company defaults on the related property level indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its related derivative obligations. The Company also has agreements at the property level with certain derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. None of the Company’s derivatives which contain credit-~~Q | 22~~risk-related features were in a net liability position as of March 31, 2024.

HHC 2024 FORM 10-Q | 19


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


9. Commitments and Contingencies

Litigation In the normal course of business, from time to time, the Company is involved in legal proceedings relating to the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from normal course of business legal actions are not expected to have a material effect on the Company’s consolidated financial position, results of operations, or liquidity.

~~Timarron Park~~Columbia OnThe ~~June~~Company ~~14,~~is ~~2018,~~currently developing certain property it owns in the ~~Company~~Lakefront ~~was~~neighborhood ~~served~~of ~~with~~Downtown aColumbia, ~~petition~~which ~~involving~~is ~~approximately~~subject ~~500~~to ~~individuals~~certain orrecorded ~~entities~~documents, ~~who~~covenants, ~~claim~~and ~~that~~restrictions ~~their~~(Covenants). ~~properties~~Under the Covenants, ~~located~~HHH inis the ~~Timarron~~master ~~Park~~developer of the Lakefront neighborhood. ofIn ~~The~~2017, ~~Woodlands~~IMH Columbia, ~~were~~LLC ~~damaged~~(IMH) bypurchased ~~flood~~the ~~waters~~site ~~that~~of ~~resulted~~a ~~from~~former ~~the~~Sheraton ~~unprecedented~~Hotel ~~rainfall~~(Hotel ~~that~~Lot) ~~occurred~~subject ~~throughout~~to ~~Harris~~the ~~County~~Covenants. ~~and~~IMH ~~surrounding~~has ~~areas~~made ~~during~~demands ~~Hurricane~~that ~~Harvey~~HHH inaccede ~~August~~to ~~2017.~~IMH’s ~~The~~development ~~complaint~~plans ~~was~~for ~~filed~~the inHotel ~~State~~Lot ~~Court~~and inHHH ~~Harris~~has ~~County~~exercised ofits right under the ~~State~~Covenants ofto ~~Texas.~~object Into ~~general,~~IMH’s plans for the ~~plaintiffs~~Hotel ~~alleged~~Lot. ~~negligence~~IMH infiled ~~the~~a ~~development~~complaint ofseeking ~~Timarron~~(1) ~~Park~~a ~~and~~declaration ~~violations~~that ofthe ~~Texas~~Covenants’ ~~Deceptive~~limitations ~~Trade~~on ~~Practices~~changes ~~Act~~in use and ~~named~~onsite asparking ~~defendants~~were ~~The~~consented ~~Howard~~to ~~Hughes~~by ~~Corporation~~HHH, ~~The~~or ~~Woodlands~~are ~~Land~~otherwise ~~Development~~obsolete ~~Company,~~ and ~~two~~unenforceable, ~~unaffiliated~~(2) ~~parties~~damages ~~involved~~reimbursing in the ~~planning~~costs and ~~engineering~~expenses ofIMH ~~Timarron~~claims ~~Park.~~to ~~The~~have ~~plaintiffs~~incurred ~~are~~in ~~seeking~~reliance ~~restitution~~on ~~for~~HHH's ~~damages~~alleged consent to ~~their~~IMH’s ~~property~~proposed ~~and~~development, ~~diminution~~(3) damages ofrelated ~~their~~to ~~property~~the ~~values.~~expectation Onof ~~August~~lost 9profits, ~~2022,~~which ~~the~~IMH ~~Court~~alleged ~~granted~~were ~~the~~caused ~~Company’s~~by ~~summary~~HHH ~~judgment~~breaching ~~motions~~the ~~and~~Covenants ~~dismissed~~by ~~the~~prohibiting ~~plaintiffs’~~IMH ~~claims.~~from Onproceeding ~~September~~with 8,their ~~2022~~proposed development, ~~the~~and ~~plaintiffs~~(4) ~~filed~~declarations afinding ~~motion~~that ~~for~~HHH ahad ~~new~~breached ~~trial.~~the Onshared ~~October~~parking ~~21,~~related ~~2022,~~Covenants ~~the~~relating ~~Court~~to ~~denied~~HHH’s ~~the~~own ~~motion~~property. ~~for~~The ajury ~~new~~ trial. Onconcluded ~~November~~in 7,April ~~2022~~2024, and the ~~Plaintiffs~~jury ~~filed~~found ~~their~~partially ~~notice~~in favor of ~~appeal,~~IMH and ~~the~~awarded ~~appeal~~damages ~~has~~of ~~been~~$17.0 million. ~~assigned~~HHH plans to ~~the~~file ~~First~~a ~~District~~notice ~~Court~~ of ~~Appeals~~appeal and motion to reduce the damage award. The Company will continue to vigorously defend the matter as it believes that these claims are without merit and that it has substantial legal and factual defenses to the claims and allegations contained in the complaint. Based upon the present status of this matter, the Company does not believe it is probable that a loss will be incurred. Accordingly, the Company has not recorded any reserves or contingencies related to this legal matter.

~~Waiea~~Timarron Park ~~The~~On ~~Company~~June ~~entered~~14, ~~into~~2018, athe ~~settlement~~Company ~~agreement~~was served with ~~the~~a ~~Waiea~~petition ~~homeowners~~involving ~~association~~approximately ~~related~~500 toindividuals ~~certain~~or ~~construction~~entities ~~defects~~who atclaim ~~the~~that ~~condominium~~their ~~tower.~~properties, ~~Pursuant~~located toin the ~~settlement~~Timarron ~~agreement~~Park neighborhood of The Woodlands, ~~the~~were ~~Company~~damaged ~~will~~by ~~pay~~flood ~~for~~waters ~~the~~that ~~repair~~resulted offrom the ~~defects~~unprecedented rainfall that occurred throughout Harris County and surrounding areas during Hurricane Harvey in August 2017. The ~~Company~~complaint ~~believes~~was ~~that~~filed in State Court in Harris County of the State of Texas. In general, ~~contractor~~the isplaintiffs ~~ultimately~~allege ~~responsible~~negligence ~~for~~in the ~~defects~~development ~~and~~of asTimarron ~~such~~Park ~~the~~and ~~Company~~violations ~~should~~of beTexas’ ~~entitled~~Deceptive toTrade ~~recover~~Practices ~~all~~Act ~~the~~and ~~repair~~name ~~costs~~as ~~from~~defendants ~~the~~The ~~general~~Howard ~~contractor~~Hughes Corporation, ~~other~~The ~~responsible~~Woodlands ~~parties~~Land Development Company, and ~~insurance~~two ~~proceeds;~~unaffiliated ~~however,~~parties involved in the ~~Company~~planning ~~can~~and ~~provide~~engineering noof ~~assurances~~Timarron ~~that~~Park. ~~all~~The orplaintiffs ~~any~~are ~~portion~~seeking ofrestitution ~~the~~for ~~costs~~damages ~~will~~to betheir ~~recovered~~property and diminution of their property values. ~~Total~~On ~~estimated~~August ~~cost~~9, ~~related~~2022, tothe Court granted the ~~remediation~~Company’s issummary ~~$155~~judgment motions and dismissed the plaintiffs’ claims.4 ~~million~~On September 8, ~~inclusive~~2022, ofthe ~~$16~~plaintiffs filed a motion for a new trial.1 ~~million~~On ofOctober ~~additional~~21, ~~anticipated~~2022, ~~costs~~the ~~recognized~~Court indenied ~~2023~~the motion for a new trial. AsOn ofNovember ~~September 30~~7, ~~2023~~2022, athe ~~total~~Plaintiffs filed their notice of ~~$11~~appeal.7 ~~million~~The ~~remains~~Company inwill ~~Construction~~continue ~~payables~~to ~~for~~vigorously defend the ~~estimated~~matter ~~repair~~as ~~costs~~it ~~related~~believes that these claims are without merit and that it has substantial legal and factual defenses to the claims and allegations contained in the complaint. Based upon the present status of this matter, ~~which~~the Company does not believe it is ~~included~~probable inthat ~~Accounts~~a ~~payable~~loss ~~and~~will ~~other~~be ~~liabilities~~incurred. inAccordingly, the ~~accompanying~~Company ~~Condensed~~has ~~Consolidated~~not ~~Balance~~recorded ~~Sheets~~a charge as a result of this action.

~~250~~Waiea The ~~Water~~Company ~~Street In~~entered ~~2021~~into a settlement agreement with the Waiea homeowners association related to certain construction defects at the condominium tower. Pursuant to the settlement agreement, the Company ~~received~~will pay for the ~~necessary~~repair ~~approvals~~of ~~for~~the ~~its~~defects. ~~250~~The ~~Water~~Company ~~Street~~believes ~~development~~that ~~project,~~the ~~which~~general ~~includes~~contractor ais ~~mixed-use~~ultimately ~~development~~responsible ~~with~~for ~~affordable~~the defects and ~~market-rate~~as ~~apartments,~~such ~~community-oriented~~the ~~spaces~~Company should be entitled to recover all the repair costs from the general contractor, ~~and~~other ~~office~~responsible ~~space.~~parties, Inand ~~May~~insurance ~~2021~~proceeds; however, the Company ~~received~~can ~~approval~~provide ~~from~~no assurances that all or any portion of the ~~New~~costs ~~York~~will ~~City~~be ~~Landmarks~~recovered. ~~Preservation~~Total ~~Commission~~estimated ~~(LPC)~~cost onrelated ~~its~~to ~~proposed~~the ~~design~~remediation ~~for~~is $158.4 million, inclusive of $3.0 million of additional costs recognized in the ~~250~~first ~~Water~~quarter ~~Street~~of ~~site~~2024. The ~~Company~~sixth ~~received~~and final ~~approvals~~amendment inof ~~December~~resolution ~~2021~~of ~~through~~disputes and release agreement was executed during the ~~New~~first ~~York~~quarter ~~City~~of ~~Uniform~~2024, ~~Land~~thereby ~~Use~~releasing ~~Review~~the ~~Procedure~~Company ~~known~~from asany ~~ULURP,~~further ~~which~~claims ~~allowed~~or demands from the ~~necessary~~Waiea ~~transfer~~homeowners ofassociation ~~development~~arising ~~rights~~from or relating to the ~~parking~~construction ~~lot~~or ~~site~~repair of the condominium project. ~~The~~As ~~Company~~of ~~began~~March 31, ~~initial~~2024, ~~foundation~~$2.6 ~~and~~million ~~voluntary~~remains ~~site~~in ~~remediation~~Construction ~~work~~payables for the estimated repair costs related to this matter, which is included in Accounts payable and other liabilities in the ~~second~~accompanying ~~quarter~~Condensed ofConsolidated ~~2022~~Balance Sheets.

~~The~~250 ~~Company~~Water ~~has~~Street In ~~prevailed in various lawsuits filed in~~ 2021, ~~and~~the ~~2022~~Company ~~challenging~~received the ~~zoning~~necessary ~~and development~~ approvals infor ~~order~~its to250 ~~prevent~~Water ~~construction~~Street ofdevelopment ~~this~~ project~~. In September 2021~~, ~~the~~which ~~New~~includes ~~York~~a ~~State~~mixed-use ~~Supreme~~development ~~Court~~with ~~dismissed~~affordable onand ~~procedural~~market-rate ~~grounds~~apartments, acommunity-oriented ~~lawsuit~~spaces, ~~challenging~~and ~~the~~office ~~LPC approval~~space. In ~~February~~May ~~2022~~2021, anthe ~~additional~~Company ~~lawsuit~~received ~~was~~approval ~~filed~~from inthe New York ~~State~~City ~~Supreme~~Landmarks ~~Court~~Preservation byCommission ~~opponents~~(LPC) ofon ~~the~~its ~~project~~proposed ~~challenging~~design for the ~~land~~250 ~~use~~Water ~~approvals~~Street ~~for~~site. ~~250~~The ~~Water~~Company ~~Street~~received ~~previously~~final ~~granted~~approvals toin ~~the~~December ~~Company~~2021 ~~under~~through the ~~ULURP,~~New ~~and~~York inCity ~~August~~Uniform ~~2022~~Land ~~the~~Use ~~Court~~Review ~~ruled~~Procedure inknown ~~the~~as ~~Company’s favor~~ULURP, ~~denying~~which ~~all~~allowed ~~claims~~the necessary transfer of development rights to the ~~petitioners~~parking lot site. The ~~same~~Company ~~petitioners~~began ~~subsequently~~initial ~~filed~~foundation aand ~~request~~voluntary tosite ~~reargue~~remediation ~~and~~work ~~renew~~in the ~~case,~~second ~~which~~quarter ~~the~~of ~~Court~~2022 ~~rejected~~and completed remediation work in ~~January~~December 2023.

HHC ~~2023~~2024 FORM 10-Q | 2320


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

The Company has prevailed in various lawsuits filed in 2021 and 2022 challenging the development approvals in order to prevent construction of this project. In September 2021, the New York State Supreme Court dismissed on procedural grounds a lawsuit challenging the LPC approval. In February 2022, an additional lawsuit was filed in New York State Supreme Court by opponents of the project challenging the land use approvals for 250 Water Street previously granted to the Company under the ULURP, and in August 2022 the Court ruled in the Company’s favor, denying all claims of the petitioners. The same petitioners subsequently filed a request to reargue and renew the case, which the Court rejected in January 2023.

A separate lawsuit was filed in July 2022 again challenging the Landmarks Preservation Commission approval. In January 2023, a Court ruled in favor of the petitioners vacating the Certificate of Appropriateness (COA) issued by the LPC. The Company immediately appealed this decision to the New York State Supreme Court’s Appellate Division and on June 6, 2023, an Appellate Division panel of five judges unanimously reversed the lower Court’s decision, reinstating the COA. Subsequently, on June 29, 2023, petitioners filed a motion requesting reargument or, in the alternative, permission to appeal the decision of the Appellate Division to the New York State Court of Appeals. On August 31, 2023, the Appellate denied petitioners’ motion in full. Subsequently, petitioners filed a motion in the Court of Appeals for permission to appeal to that court. The decision on the motion by the Court of Appeals is pending. Although it is not possible to predict with certainty the outcome of petitioners’ motion, such requests are rarely granted and there is no further judicial recourse after the Court of Appeals. If the pending motion for permission to appeal were to be granted by the Court of Appeals, the Company believes the Appellate Division’s ruling will be upheld based on the substantial legal and factual arguments supporting its decision. The lawsuit is not seeking monetary damages as the petitioners are seeking to enjoin the Company from moving forward with the development of 250 Water Street. Because the Company believes that a potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter.

Letters of Credit and Surety Bonds As of ~~September~~March 3031, ~~2023~~2024, the Company had outstanding letters of credit totaling $3.9 million and surety bonds totaling $~~456~~461.96 million. As of December 31, ~~2022~~2023, the Company had outstanding letters of credit totaling $23.19 million and surety bonds totaling $~~346~~470.34 million. These letters of credit and surety bonds were issued primarily in connection with insurance requirements, special real estate assessments, and construction obligations.

Operating Leases The Company leases land or buildings at certain properties from third parties, which are recorded in Operating lease right-of-use assets, ~~net~~ and Operating lease obligations on the Condensed Consolidated Balance Sheets. See Note 1413 - Leases for further discussion. Contractual rental expense, including participation rent, was $1.38 million for the three months ended ~~September~~March 3031, ~~2023 and $4.0 million for the nine months ended September 30~~2024, ~~2023,~~ compared to $1.23 million for the three months ended ~~September~~March 3031, ~~2022 and $4~~2023.4 ~~million for the nine months ended September 30, 2022.~~ The amortization of above and below‑market ground leases and straight‑line rents included in the contractual rent amount was not significant.

Guarantee Agreements InThe ~~October 2022, Floreo, the~~ Company’s ~~50%-owned~~evaluates joint venture in Teravalis, closed on a $165 million bond financing with Mizuho Capital Markets, LLC (Mizuho), with outstanding borrowings of $65.4 million as of September 30, 2023. A wholly owned subsidiary of the ~~Company~~likelihood ~~(HHC Member) provided a guarantee for the bond in the form~~ of afuture ~~collateral~~performance ~~maintenance commitment~~ under ~~which it will post refundable cash collateral if~~ the ~~Loan-to-Value~~below ~~(LTV)~~guarantees ratio exceeds 50%. A separate wholly owned subsidiary of the Company also provided a backstop guarantee of up to $50 million of the cash collateral commitment in the event HHC Member fails to make necessary payments when due. The cash collateral becomes nonrefundable if Floreo defaults on the bond obligation. The Company received a fee of $5.0 million in exchange for providing this guaranteeand, ~~which was recognized in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets~~ as of ~~September~~March 3031, ~~2023~~2024, and December 31, ~~2022. This liability amount will be recognized in Other income (loss)~~2023, ~~net~~there inwere ano ~~manner~~events ~~that~~requiring ~~corresponds~~financial toperformance ~~the bond repayment by Floreo. The Company’s maximum exposure~~ under ~~this~~these ~~guarantee is equal to the cash collateral that the Company may be obligated to post~~guarantees. As of September 30, 2023, the Company has not posted any cash collateral. Given the existence of other collateral including the undeveloped land owned by Floreo, the entity’s extensive and discretionary development plan, and its eligibility for reimbursement of a significant part of the development costs from the Community Facility District in Arizona, the Company does not expect to have to post collateral.

Floreo In ~~conjunction~~October ~~with~~2022, Floreo, the ~~execution~~Company’s 50%-owned joint venture in Teravalis, closed on a $165 million bond financing. Outstanding borrowings as of March 31, 2024, were $96.1 million. A wholly owned subsidiary of the ~~ground~~Company ~~lease~~(HHC Member) provided a guarantee for the ~~Seaport,~~bond in the form of a collateral maintenance commitment under which it will post refundable cash collateral if the Loan-to-Value (LTV) ratio exceeds 50%. A separate wholly owned subsidiary of the Company ~~executed~~also provided a ~~completion~~backstop guarantee ~~for~~of up to $50 million of the ~~core~~cash ~~and~~collateral ~~shell~~commitment ~~construction~~in ofthe event HHC Member fails to make necessary payments when due. The cash collateral becomes nonrefundable if Floreo defaults on the ~~Tin~~bond ~~Building~~obligation. The ~~core~~Company ~~and~~received ~~shell~~a ~~construction~~fee of $5.0 million in exchange for providing this guarantee, which was ~~completed~~recognized in Accounts payable and other liabilities on the ~~fourth~~Condensed ~~quarter~~Consolidated Balance Sheets as of ~~2021~~March 31, 2024, and ~~the~~December ~~remainder~~31, of2023. ~~construction~~This ~~was~~liability ~~completed~~amount will be recognized in Other income (loss), net in a manner that corresponds to the ~~third~~bond ~~quarter~~repayment ofby ~~2022~~Floreo. The Company’s ~~received~~maximum ~~the~~exposure ~~necessary~~under ~~approvals~~this ~~from~~guarantee is equal to the ~~New~~cash ~~York~~collateral ~~City~~that ~~Economic~~the ~~Development~~Company ~~Corporation~~may be obligated to ~~relinquish~~post. As of March 31, 2024, the ~~guarantee~~Company has not posted any cash collateral. Given the existence of other collateral including the undeveloped land owned by Floreo, the entity’s extensive and discretionary development plan, and its eligibility for reimbursement of a significant part of the development costs from the Community Facility District in ~~early~~Arizona, ~~2023~~the Company does not expect to have to post collateral.

AsDowntown ~~part~~Columbia The ~~of the~~ Company’s ~~development~~wholly ~~permits~~owned ~~with~~subsidiaries ~~the~~agreed ~~Hawai‘i~~to ~~Community~~complete ~~Development~~defined ~~Authority~~public ~~for~~improvements ~~the~~and ~~condominium~~to ~~towers~~indemnify atHoward ~~Ward~~County, ~~Village~~Maryland, ~~the~~for ~~Company~~certain ~~entered~~matters ~~into~~as apart ~~guarantee whereby it is required to reserve 20%~~ of the ~~residential~~Downtown ~~units~~Columbia ~~for~~Redevelopment ~~local~~District ~~residents~~TIF ~~who~~bonds. ~~meet~~To ~~certain~~the ~~maximum~~extent ~~income~~that ~~and~~increases ~~net~~in ~~worth~~taxes ~~requirements.~~do ~~This~~not ~~guarantee,~~cover ~~which~~debt isservice ~~triggered~~payments ~~once~~on the ~~necessary~~TIF ~~permits are granted and construction commences~~bonds, ~~was satisfied for Waiea, Anaha, and Ae`o, with~~ the ~~opening~~Company’s ofwholly Keowned ~~Kilohana,~~subsidiary ~~which~~ is aobligated ~~workforce tower fully earmarked~~ to ~~fulfill~~pay ~~this~~special ~~obligation for the first four towers~~taxes. ~~The~~Management ~~reserved~~has ~~units~~concluded ~~for ‘A‘ali‘i tower are included in the ‘A‘ali‘i tower. Units for Kō'ula~~that, ~~Victoria~~as ~~Place, and The Park Ward Village will be satisfied with the construction~~ of ~~Ulana~~March 31, ~~Ward Village~~2024, ~~which~~any isobligations ~~a second workforce tower fully earmarked~~ to ~~satisfy~~pay ~~the~~special ~~remaining~~taxes ~~reserved~~are ~~housing~~not ~~guarantee in the community~~probable. ~~Ulana Ward Village began construction in early 2023.~~

~~The~~HHC ~~Company~~2024 ~~evaluates~~FORM ~~the likelihood of future performance under these guarantees and, as of September 30, 2023, and December 31, 2022, there were no events requiring financial performance under these guarantees.~~10-Q | 21

HHC 2023 FORM 10-Q | 24


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

Ward Village As part of the Company’s development permits with the Hawai‘i Community Development Authority for the condominium towers at Ward Village, the Company entered into a guarantee whereby it is required to reserve 20% of the residential units for local residents who meet certain maximum income and net worth requirements. This guarantee, which is triggered once the necessary permits are granted and construction commences, was satisfied for Waiea, Anaha, and Ae`o, with the opening of Ke Kilohana, which is a workforce tower fully earmarked to fulfill this obligation for the first four towers. The reserved units for ‘A‘ali‘i tower are included in the ‘A‘ali‘i tower. Units for Kō'ula, Victoria Place, and The Park Ward Village will be satisfied with the construction of Ulana Ward Village, which is a second workforce tower fully earmarked to fulfill the remaining reserved housing guarantee in the community. Ulana Ward Village began construction in early 2023.


10. Income Taxes

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

thousands except percentages

~~2023~~

~~2022~~

~~2023~~2024

~~2022~~2023

Income tax expense (benefit)

~~(144,701)~~

~~33,858~~

(~~161~~17,~~349~~029)

41(1,~~822~~278)

Income (loss) before income taxes

~~(688,688)~~

~~141,527~~

(~~747~~68,~~104~~934)

~~173~~(23,~~094~~905)

Effective tax rate

~~21.0~~

~~23.9~~

2124.67

245.23

The Company’s tax provision for interim periods is determined using an estimate of its annual current and deferred effective tax rates, adjusted for discrete items. The Company’s effective tax rate is typically impacted by non-deductible executive compensation and other permanent differences as well as state income taxes, which cause the Company’s effective tax rate to deviate from the federal statutory rate.


11. Accumulated Other Comprehensive Income (Loss)

The following tables summarize changes in AOCI, all of which are presented net of tax:

thousands
Balance as of June 30, 2023	$	7,753
Balance at December 31, 2023	$	1,272
Derivative instruments:
Other comprehensive income (loss) before reclassifications	53,~~420~~830
(Gain) loss reclassified from accumulated other comprehensive income (loss) to net income	(5,602)
(Gain) loss reclassified to net income	(1,205)
Net current-period other comprehensive income (loss)	(182)
Net current-period other comprehensive Income (loss)	2,625
Balance as of September 30, 2023	$	7,571
Balance at March 31, 2024	$	3,897
Balance as of June 30, 2022	$	2,362
Balance at December 31, 2022	$	10,335
Derivative instruments:
Other comprehensive income (loss) before reclassifications	6(2,~~794~~651)
(Gain) loss reclassified from accumulated other comprehensive income (loss) to net income	728
(Gain) loss reclassified to net income	(2,679)
Net current-period other comprehensive income (loss)	7(5,~~522~~330)
Balance at September 30, 2022	$	9,884
Balance at March 31, 2023	$	5,005
thousands
Balance as of December 31, 2022	$	10,335
Derivative instruments:
Other comprehensive income (loss) before reclassifications	9,055
(Gain) loss reclassified to net income	(11,819)
Net current-period other comprehensive Income (loss)	(2,764)
Balance at September 30, 2023	$	7,571
Balance at December 31, 2021	$	(14,457)
Derivative instruments:
Other comprehensive income (loss) before reclassifications	24,355
(Gain) loss reclassified to net income	6,709
Reclassification of the Company's share of previously deferred derivative gains to net income (a)	(6,723)
Net current-period other comprehensive income (loss)	24,341
Balance at September 30, 2022	$	9,884

HHC 2023 FORM 10-Q | 25

FINANCIAL STATEMENTSFOOTNOTES Table of Contents

The following table summarizes the amounts reclassified out of AOCI:

Accumulated Other Comprehensive Income (Loss) Components	~~Amounts reclassified from Accumulated other comprehensive income (loss)~~				Amounts reclassified from Accumulated other comprehensive income (loss)
	Three Months Ended September 30,				Nine Months Ended September 30,					Affected line items in the Statements of Operations
			Three Months Ended March 31,				Affected line items in the Statements of Operations
thousands	~~2023~~		~~2022~~		~~2023~~2024			~~2022~~		2023
(Gains) losses on cash flow hedges	$	~~(7,240)~~	$	~~946~~	$	(151,~~274~~561)		$	8(3,~~714~~462)	Interest expense
Company's share of previously deferred derivative gains	—		—		—			(8,636)		Equity in earnings (losses) from unconsolidated ventures
Income tax expense (benefit)					356			783		Income tax expense (benefit)
Income tax expense (benefit)	1,638		(218)		3,455			(92)		Income tax expense (benefit)
Total reclassifications of (income) loss, net of tax					$	(1,205)		$	(2,679)
Total reclassifications of (income) loss, net of tax	$	(5,602)	$	728	$	(11,819)		$	(14)

~~12.~~HHC ~~Common~~2024 ~~Stock~~FORM ~~and Equity~~10-Q | 22

On August 11, 2023, upon the consummation of the holding company reorganization transaction, existing shares of common stock of HHC were automatically converted, on a one-for-one basis, into shares of common stock of HHH, the new parent holding company, with the same designations, rights, powers, and preferences, and the same qualifications, limitations, and restrictions, as the shares of HHC common stock immediately prior to the reorganization. As a result of the reorganization, HHC recorded various intercompany activities during the third quarter ended September 30, 2023, as capital transactions, which are reflected in HHC’s Condensed Consolidated Statement of Equity.

Additionally, in connection with the holding company reorganization, HHC transferred to HHH, and HHH assumed, sponsorship of all of HHC’s stock plans along with all of HHC’s rights and obligations under each plan. Subsequent to the reorganization, stock-based compensation associated with HHH equity awards granted and outstanding to HHC employees is reflected as capital contributions from HHH to HHC.

Net income (loss) per share for HHC is no longer required, as its shares are not publicly traded, and HHC is now a direct, wholly owned subsidiary of HHH.

13. Revenues

Revenues from contracts with customers (excluding lease-related revenues) are recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenue and cost of sales for condominium units sold are not recognized until the construction is complete, the sale closes, and the title to the property has transferred to the buyer (point in time). Additionally, certain real estate selling costs, such as the costs related to the Company’s condominium model units, are either expensed immediately or capitalized as property and equipment and depreciated over their estimated useful life.

HHC 2023 FORM 10-Q | 26


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents


12. Revenues

The following presents the Company’s revenues disaggregated by revenue source:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

thousands

~~2023~~

~~2022~~

~~2023~~2024

~~2022~~2023

Revenues from contracts with customers

Recognized at a point in time:

Condominium rights and unit sales

~~25,962~~

~~418,645~~

~~46,915~~23

~~459~~6,~~681~~087

Master Planned Communities land sales

~~75,378~~

~~52,585~~

~~177~~32,~~045~~415

~~199~~59,~~032~~361

Builder price participation

~~15,847~~

~~18,852~~

4512,~~763~~566

5114,~~819~~009

Total

~~117,187~~

~~490,082~~

~~269~~45,~~723~~004

~~710~~79,~~532~~457

Recognized at a point in time or over time:

Other land, rental, and property revenues

~~46,280~~

~~52,550~~

~~112~~18,~~146~~383

~~119~~18,~~870~~968

Rental and lease-related revenues

Rental revenue

~~105,192~~

~~96,917~~

~~306~~107,~~395~~751

~~296~~97,~~081~~864

Total revenues

~~268,659~~

~~639,549~~

~~688~~171,~~264~~138

1196,~~126,483~~289

Revenues by segment

Operating Assets revenues

~~116,874~~

~~109,493~~

~~339~~110,~~226~~152

~~327~~100,~~742~~925

Master Planned Communities revenues

~~95,799~~

~~78,188~~

~~236~~48,~~123~~875

~~266~~77,~~990~~013

Seaport revenues

~~29,490~~

~~32,501~~

6411,~~191~~502

7011,~~053~~897

Strategic Developments revenues

~~26,481~~

~~419,353~~

~~48,679~~593

~~461~~6,~~655~~440

Corporate revenues

4516

4314

Total revenues

~~268,659~~

~~639,549~~

~~688~~171,~~264~~138

1196,~~126,483~~289

Contract Assets and Liabilities Contract assets are the Company’s right to consideration in exchange for goods or services that have been transferred to a customer, excluding any amounts presented as a receivable. Contract liabilities are the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration.

There were no contract assets for the periods presented. The contract liabilities primarily relate to escrowed condominium deposits, MPC land sales deposits, and deferred MPC land sales related to unsatisfied land improvements. The beginning and ending balances of contract liabilities and significant activity during the periods presented are as follows:

thousands	Contract Liabilities
Balance at December 31, 2023	$	579,328
Consideration earned during the period	(16,762)
Consideration received during the period	74,674
Balance at March 31, 2024	$	637,240
Balance at December 31, 2022	$	457,831
Consideration earned during the period	(~~115~~16,~~302~~919)
Consideration received during the period	~~201~~78,~~571~~366
Balance at September 30, 2023	$	544,100
Balance at March 31, 2023	$	519,278
Balance at December 31, 2021	$	431,177
Consideration earned during the period	(558,462)
Consideration received during the period	693,535
Balance at September 30, 2022	$	566,250

~~Remaining~~HHC ~~Unsatisfied~~2024 ~~Performance~~FORM Obligations The Company’s remaining unsatisfied performance obligations represent a measure of the total dollar value of work to be performed on contracts executed and in progress. These performance obligations primarily relate to the completion of condominium construction and transfer of control to a buyer, as well as the completion of contracted MPC land sales and related land improvements. These obligations are associated with contracts that generally are non10-cancelable by the customer after 30 days; however, purchasers of condominium units have the right to cancel the contract should the Company elect not to construct the condominium unit within a certain period of time or materially change the design of the condominium unit. The aggregate amount of the transaction price allocated to the Company’s remaining unsatisfied performance obligations as of September 30, 2023, is $2.8 billion. The Company expects to recognize this amount as revenue over the following periods:Q | 23

HHC 2023 FORM 10-Q | 27


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

thousands			Less than 1 year									1 - 2 years			Thereafter
Total remaining unsatisfied performance obligations						$	1,039,780					$	19,042					$	1,769,639

Remaining Unsatisfied Performance Obligations The Company’s remaining unsatisfied performance obligations represent a measure of the total dollar value of work to be performed on contracts executed and in progress. These performance obligations primarily relate to the completion of condominium construction and transfer of control to a buyer, as well as the completion of contracted MPC land sales and related land improvements. These obligations are associated with contracts that generally are non-cancelable by the customer after 30 days for all Ward Village condominiums and after 6 days for The Ritz-Carlton Residences; however, purchasers of condominium units have the right to cancel the contract should the Company elect not to construct the condominium unit within a certain period of time or materially change the design of the condominium unit. The aggregate amount of the transaction price allocated to the Company’s remaining unsatisfied performance obligations as of March 31, 2024, is $3.5 billion. The Company expects to recognize this amount as revenue over the following periods:


thousands	Less than 1 year			1-2 years		3 years and thereafter
Total remaining unsatisfied performance obligations		$	1,060,125	$	1,087,244		$	1,316,260

The Company’s remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, and deferrals, as appropriate. These amounts exclude estimated amounts of variable consideration which are constrained, such as builder price participation.

1413. Leases

~~Lessee Arrangements~~ The Company ~~determines~~has ~~whether an arrangement is a~~ lease atagreements ~~inception.~~with ~~Operating leases are included in Operating~~ lease ~~right-of-use assets, net~~ and ~~Operating lease obligations on the Condensed Consolidated Balance Sheets. Right~~non-~~of-use assets represent the Company’s right to use an underlying asset for the~~ lease ~~term~~components and ~~lease~~has ~~liabilities~~elected ~~represent the Company’s obligation~~ to ~~make~~aggregate ~~lease~~these ~~payments~~components ~~arising~~into ~~from~~a ~~the~~single ~~lease.~~component ~~Operating~~for ~~lease~~all ~~right-of-use~~classes ~~assets and liabilities are recognized at commencement date based on the present value~~ of ~~future~~underlying ~~minimum lease payments over the lease term~~assets. AsCertain ~~most~~ of the Company’s ~~leases do not provide an implicit rate, the Company uses an estimate of the incremental borrowing rate based on the information available at the~~ lease ~~commencement~~agreements ~~date~~include ~~in determining the present value of future lease payments. The Operating lease right~~non-~~of-use asset also includes any~~ lease ~~payments~~components ~~made,~~such ~~less any lease incentives and initial direct costs incurred. The Company does not have any finance leases~~ as offixed ~~September 30,~~common ~~2023,~~area ormaintenance ~~December 31, 2022~~charges.

Lessee Arrangements The Company’s ~~lessee~~determines ~~agreements~~whether ~~consist~~an ofarrangement ~~operating~~is ~~leases~~a ~~primarily~~lease ~~for~~at ~~ground~~inception. Operating leases ~~and~~are ~~other~~included ~~real~~in ~~estate.~~Operating ~~The~~lease ~~Company’s~~right-of-use ~~leases~~assets ~~have~~and ~~remaining~~Operating lease ~~terms~~obligations ofon ~~less~~the ~~than~~Consolidated 2Balance ~~years~~Sheets. toRight-of-use ~~approximately~~assets 50represent ~~years,~~the ~~excluding~~Company’s ~~extension~~right ~~options.~~to ~~The~~use ~~Company~~an ~~considers~~underlying ~~its~~asset ~~strategic~~for ~~plan and~~ the ~~life~~lease ofterm ~~associated~~and ~~agreements~~lease inliabilities ~~determining~~represent ~~when~~the ~~options~~Company’s obligation to ~~extend~~make ~~or terminate~~ lease ~~terms~~payments ~~are~~arising ~~reasonably~~from ~~certain~~the ~~of being exercised~~lease. ~~Leases~~Operating ~~with~~lease anright-of-use ~~initial~~assets ~~term~~and ofliabilities 12are ~~months~~recognized orat ~~less~~commencement ~~are~~date ~~not~~based ~~recorded~~ on the ~~balance~~present ~~sheet;~~value ~~the~~of ~~Company~~future ~~recognizes~~minimum lease ~~expense~~payments ~~for these leases on a straight-line basis~~ over the lease term. ~~Certain~~As most of the Company’s ~~lease~~leases ~~agreements~~do ~~include~~not ~~variable~~provide ~~lease~~an ~~payments~~implicit ~~based~~rate, onthe aCompany ~~percentage~~uses an estimate of ~~income~~the ~~generated~~incremental ~~through~~borrowing ~~subleases,~~rate ~~changes~~based inon ~~price~~the ~~indices~~information ~~and~~available ~~market~~at ~~rates,~~the ~~and~~lease ~~other~~commencement ~~costs~~date ~~arising~~in ~~from~~determining ~~operating,~~the ~~maintenance,~~present ~~and~~value ~~taxes~~of future lease payments. The ~~Company’s~~Operating lease ~~agreements~~right-of-use doasset ~~not~~also ~~contain~~includes ~~residual~~any ~~value~~lease ~~guarantees~~payments ormade, ~~restrictive~~less ~~covenants.~~any ~~The~~lease ~~Company~~incentives ~~leases~~and ~~certain~~initial ~~buildings~~direct ~~and~~costs ~~office~~incurred. ~~space~~The ~~constructed~~Company ondoes ~~its~~not ~~ground~~have ~~leases~~any tofinance ~~third parties~~leases.

InThe ~~June~~Company’s ~~2022~~lessee agreements consist of operating leases primarily for ground leases and other real estate. The Company’s leases have remaining lease terms of approximately 2 years to approximately 50 years, ~~the~~excluding extension options. The Company ~~sold~~considers its strategic plan and the ~~Outlet~~life ~~Collection~~of atassociated ~~Riverwalk,~~agreements ~~which~~in ~~was~~determining ~~subject~~when options to aextend ~~ground~~or terminate lease, ~~resulting~~terms inare reasonably certain of being exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a ~~reduction~~straight-line inbasis over the lease term. Certain of the Company’s ~~operating~~lease agreements include variable lease ~~right-~~payments based on a percentage of~~-use~~ ~~assets~~income generated through subleases, changes in price indices and ~~obligations~~market asrates, ~~well~~and asother ~~future~~costs ~~minimum~~arising from operating, maintenance, and taxes. The Company’s lease ~~payments~~agreements do not contain residual value guarantees or restrictive covenants. The Company leases certain buildings and office space constructed on its ground leases to third parties. The Company’s operating leases primarily relate to the Seaport ground leases.

The Company’s leased assets and liabilities are as follows:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Operating lease right-of-use assets	$	45,~~596~~649	$	4644,~~926~~897
Operating lease obligations	5153,~~761~~065		51,~~321~~584

~~The~~HHC ~~components~~2024 ofFORM ~~lease expense are as follows:~~10-Q | 24

	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2023		2022		2023		2022
Operating lease cost	$	1,707	$	1,680	$	5,124	$	5,747
Variable lease costs	258		158		849		801
Total lease cost	$	1,965	$	1,838	$	5,973	$	6,548

HHC 2023 FORM 10-Q | 28


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

~~Future~~The ~~minimum~~components ~~lease payments as~~ of ~~September 30,~~lease ~~2023,~~cost are as follows:

thousands	Operating Leases
	Three Months Ended March 31,
Remainder of 2023	$	1,482
thousands	2024		2023
2024	5,057
Operating lease cost	$	1,729	$	1,708
2025	3,668
Variable lease cost	663		392
2026	3,368
Total lease cost	$	2,392	$	2,100
2027	3,360
Thereafter	243,770
Total lease payments	260,705
Less: imputed interest	(208,944)
Present value of lease liabilities	$	51,761

Future minimum lease payments as of March 31, 2024, are as follows:


thousands	Operating Leases
Remainder of 2024	$	3,575
2025	5,117
2026	4,093
2027	3,360
2028	3,424
Thereafter	240,646
Total lease payments	260,215
Less: imputed interest	(207,150)
Present value of lease liabilities	$	53,065

Other information related to the Company’s lessee agreements is as follows:

Supplemental Condensed Consolidated Statements of Cash Flows Information	~~Nine~~Three Months Ended ~~September~~March 3031,
thousands	~~2023~~2024		~~2022~~2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows on operating leases	$	31,~~452~~482	$	41,~~324~~097

Other Information	~~September~~March 3031, ~~2023~~2024		~~September~~March 3031, ~~2022~~2023
Weighted-average remaining lease term (years)
Operating leases	4342.98		43.79
Weighted-average discount rate
Operating leases	7.87	%	7.78	%

Lessor Arrangements The Company receives rental income from the leasing of retail, office, multi-family, and other space under operating leases, as well as certain variable tenant recoveries. ~~Such~~Operating ~~operating~~ leases for retail, office, and other properties are with a variety of tenants and have a remaining average term of approximately ~~four~~five years. Lease terms generally vary among tenants and may include early termination options, extension options, and fixed rental rate increases or rental rate increases based on an index. Multi-family leases generally have a term of 12 months or less. Minimum rent revenues related to operating leases are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

thousands

~~2023~~2024

~~2022~~2023

~~2023~~

~~2022~~

Total minimum rent payments

5961,~~673~~756

57,~~246~~797

~~175,752~~

~~171,839~~

~~Total~~HHC ~~future~~2024 ~~minimum~~FORM ~~rents associated with operating leases are as follows as of September 30, 2023:~~10-Q | 25

thousands	Total Minimum Rent
Remainder of 2023	$	62,777
2024	254,321
2025	240,708
2026	222,768
2027	209,812
Thereafter	988,238
Total	$	1,978,624

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assured and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues reported on the Condensed Consolidated Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.

HHC 2023 FORM 10-Q | 29


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

~~15.~~Total ~~Segments~~future minimum rents associated with operating leases are as follows as of March 31, 2024:


thousands	Total Minimum Rent
Remainder of 2024	$	191,134
2025	247,340
2026	233,614
2027	222,423
2028	200,565
Thereafter	848,934
Total	$	1,944,010


14. Segments

The Company has four business segments that offer different products and services. HHC’s four segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. Because the Company’s four segments, Operating Assets, MPC, Seaport, and Strategic Developments, are managed separately, the Company uses different operating measures to assess operating results and allocate resources among them. The one common operating measure used to assess operating results for the Company’s business segments is earnings before tax (EBT). EBT, as it relates to each business segment, includes the revenues and expenses of each segment, as shown below. EBT excludes corporate expenses and other items that are not allocable to the segments. The Company presents EBT for each segment because the Company uses this measure, among others, internally to assess the core operating performance of the Company’s assets. The Company’s segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. All operations are within the United States. The Company’s reportable segments are as follows:

–Operating Assets – consists of developed or acquired retail, office, and multi-family properties along with other real estate investments. These properties are currently generating revenues and may be redeveloped, repositioned, or sold to improve segment performance or to recycle capital.

–MPC – consists of the development and sale of land in large‑scale, long‑term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Phoenix, Arizona.

–Seaport – consists of approximately 472,000 square feet of restaurant, retail, and entertainment properties situated in three primary locations in New York City: Pier 17, Historic Area/Uplands, and Tin Building as well as the 250 Water Street development, and equity interest in Jean-Georges Restaurants.

–Strategic Developments – consists of residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations.

HHC ~~2023~~2024 FORM 10-Q | 3026


FINANCIAL STATEMENTS FOOTNOTES			Table of Contents

Segment operating results are as follows:

thousands	Operating Assets Segment		MPC Segment		Seaport Segment		Strategic Developments Segment		Total
Three Months Ended September 30, 2023
Three Months Ended March 31, 2024
Total revenues	$	~~116~~110,~~874~~152	$	9548,~~799~~875	$	2911,~~490~~502	$	~~26,481~~593	$	~~268~~171,~~644~~122
Total operating expenses	(5551,~~786~~395)		(4125,~~239~~049)		(3321,~~303~~485)		(298,~~620~~654)		(~~159~~106,~~948~~583)
Segment operating income (loss)	6158,~~088~~757		5423,~~560~~826		(39,~~813~~983)		(38,~~139~~061)		~~108~~64,~~696~~539
Depreciation and amortization	(4344,~~127~~156)		(~~103~~110)		(105,~~808~~757)		(~~962~~1,419)		(5551,~~000~~442)
Interest income (expense), net	(3133,~~884~~476)		1615,~~031~~246		1(2,~~358~~012)		4,~~412~~024		(1016,~~083~~218)
Other income (loss), net	~~(244)~~408		—		~~313~~—		813		~~150~~411
Equity in earnings (losses) from unconsolidated ventures	15,~~364~~817		(14,~~310~~711)		(4610,~~619~~280)		5939		(3019,~~886~~135)
Gain (loss) on sale or disposal of real estate and other assets, net	164,~~050~~794		—		—		~~236~~—		164,~~286~~794
Gain (loss) on extinguishment of debt	—		—		(48)		—		(48)
Segment EBT	$	(7,856)	$	24,251	$	(28,032)	$	(5,414)	$	(17,051)
Provision for impairment	—		—		(672,492)		—		(672,492)
Corporate income, expenses, and other items									(34,854)
Segment EBT	$	3,247	$	84,798	$	(732,109)	$	687	$	(643,377)
Net income (loss)									(51,905)
Corporate income, expenses, and other items									99,390
Net (income) loss attributable to noncontrolling interests									(10)
Net income (loss)									(543,987)
Net income (loss) attributable to HHH									$	(51,915)
Net (income) loss attributable to noncontrolling interests									(46)
Three Months Ended March 31, 2023
Net income (loss) attributable to HHH									$	(544,033)
Total revenues	$	100,925	$	77,013	$	11,897	$	6,440	$	196,275
Three Months Ended September 30, 2022
Total operating expenses	(47,599)		(34,351)		(18,916)		(11,059)		(111,925)
Total revenues	$	109,493	$	78,188	$	32,501	$	419,353	$	639,535
Segment operating income (loss)	53,326		42,662		(7,019)		(4,619)		84,350
Total operating expenses	(48,994)		(31,055)		(31,404)		(300,515)		(411,968)
Depreciation and amortization	(39,632)		(107)		(10,527)		(943)		(51,209)
Segment operating income (loss)	60,499		47,133		1,097		118,838		227,567
Interest income (expense), net	(28,911)		15,812		1,186		2,063		(9,850)
Depreciation and amortization	(37,714)		(104)		(9,651)		(1,406)		(48,875)
Other income (loss), net	2,282		(103)		1		94		2,274
Interest income (expense), net	(23,340)		13,492		1,731		5,817		(2,300)
Equity in earnings (losses) from unconsolidated ventures	1,905		4,108		(10,820)		5		(4,802)
Other income (loss), net	421		—		(18)		900		1,303
Gain (loss) on sale or disposal of real estate and other assets, net	4,730		—		—		—		4,730
Equity in earnings (losses) from unconsolidated ventures	4,132		14,862		(11,273)		(13)		7,708
Segment EBT	$	(6,300)	$	62,372	$	(27,179)	$	(3,400)	$	25,493
Segment EBT	$	3,998	$	75,383	$	(18,114)	$	124,136	$	185,403
Corporate income, expenses, and other items									(48,120)
Corporate income, expenses, and other items									(77,734)
Net income (loss)									(22,627)
Net income (loss)									107,669
Net (income) loss attributable to noncontrolling interests									(118)
Net (income) loss attributable to noncontrolling interests									427
Net income (loss) attributable to HHH									$	(22,745)
Net income (loss) attributable to HHH									$	108,096
Nine Months Ended September 30, 2023
Total revenues	$	339,226	$	236,123	$	64,191	$	48,679	$	688,219
Total operating expenses	(157,837)		(103,668)		(78,884)		(76,020)		(416,409)
Segment operating income (loss)	181,389		132,455		(14,693)		(27,341)		271,810
Depreciation and amortization	(123,637)		(316)		(31,804)		(2,848)		(158,605)
Interest income (expense), net	(91,080)		49,004		3,855		11,917		(26,304)
Other income (loss), net	1,998		(103)		(1,287)		158		766
Equity in earnings (losses) from unconsolidated ventures	5,311		21,056		(68,335)		94		(41,874)
Gain (loss) on sale or disposal of real estate and other assets, net	20,764		—		—		236		21,000
Gain (loss) on extinguishment of debt	—		—		(48)		—		(48)
Provision for impairment	—		—		(672,492)		—		(672,492)
Segment EBT	$	(5,255)	$	202,096	$	(784,804)	$	(17,784)	$	(605,747)
Corporate income, expenses, and other items									19,992
Net income (loss)									(585,755)
Net (income) loss attributable to noncontrolling interests									(166)
Net income (loss) attributable to HHH									$	(585,921)

HHC 2023 FORM 10-Q | 31

FINANCIAL STATEMENTSFOOTNOTES Table of Contents

thousands	Operating Assets Segment		MPC Segment		Seaport Segment		Strategic Developments Segment		Total
Nine Months Ended September 30, 2022
Total revenues	$	327,742	$	266,990	$	70,053	$	461,655	$	1,126,440
Total operating expenses	(146,958)		(113,087)		(79,329)		(344,271)		(683,645)
Segment operating income (loss)	180,784		153,903		(9,276)		117,384		442,795
Depreciation and amortization	(115,143)		(286)		(25,194)		(4,083)		(144,706)
Interest income (expense), net	(64,776)		35,697		3,003		12,334		(13,742)
Other income (loss), net	(57)		23		289		1,361		1,616
Equity in earnings (losses) from unconsolidated ventures	21,898		16,990		(20,223)		863		19,528
Gain (loss) on sale or disposal of real estate and other assets, net	4,018		—		—		(9)		4,009
Gain (loss) on extinguishment of debt	(645)		—		—		—		(645)
Segment EBT	$	26,079	$	206,327	$	(51,401)	$	127,850	$	308,855
Corporate income, expenses, and other items									(177,583)
Net income (loss)									131,272
Net (income) loss attributable to noncontrolling interests									510
Net income (loss) attributable to HHH									$	131,782

The assets by segment and the reconciliation of total segment assets to Total assets in the Condensed Consolidated Balance Sheets are summarized as follows:

thousands	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
Operating Assets	$	3,~~532~~561,~~554~~321	$	3,~~448~~577,~~823~~694
Master Planned Communities	3,~~438~~435,~~699~~883		3,~~272~~358,~~655~~821
Seaport (a)	471,977		1,166,950
Seaport	486,713		485,898
Strategic Developments	1,~~537~~840,~~429~~743		1,~~359~~638,~~180~~955
Total segment assets	89,~~980~~324,~~659~~660		9,~~247~~061,~~608~~368
Corporate	~~387~~308,~~909~~993		~~355~~514,~~855~~244
Total assets	$	9,~~368~~633,~~568~~653	$	9,~~603~~575,~~463~~612

~~(a)During~~HHC ~~the~~2024 ~~third~~FORM ~~quarter of 2023, the Company recorded a $709.5 million impairment charge related to the Seaport segment. Refer to Note 4~~ 10- ~~Impairment for additional information.~~Q | 27

HHC 2023 FORM 10-Q | 32


MANAGEMENT’S NARRATIVE ANALYSIS			Table of Contents

Item 2. Management’s Narrative Analysis of Results of Operations

The following discussion and analysis by management should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes included in this quarterly report on Form 10-Q (the Quarterly Report) and in The Howard Hughes Corporation’s (HHC or the Company) audited annual report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023, filed with the Securities and Exchange Commission (SEC) on February 27, ~~2023~~2024 (the Annual Report). All references to numbered Notes are to specific notes to our unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.

Index			Page
Forward-looking Information			3429
Overview			3631
Results of Operations			3733
Operating Assets			3833
Master Planned Communities			4135
Seaport			4538
Strategic Developments			4941
Corporate Income, Expenses, and Other Items			5143

HHC ~~2023~~2024 FORM 10-Q | 3328


MANAGEMENT’S NARRATIVE ANALYSIS			Table of Contents


FORWARD-LOOKING INFORMATION

Certain statements contained in or incorporated by reference into this Quarterly Report, including, without limitation, those related to our future operations constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements and may include words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “project,” “realize,” “should,” “transform,” “will,” “would,” and other statements of similar expression.

These forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Quarterly Report or in the information incorporated herein by reference.

Forward-looking statements include:

– accelerated growth in our core Master Planned Communities (MPC) assets

– expected performance of our stabilized, income-producing properties and the performance and stabilization timing of properties that we have recently placed into service or are under construction

– forecasts of our future economic performance

– expected benefits of our derivative instruments and mortgage activity over time

– expected capital required for our operations and development opportunities for our properties

–anticipated benefits of our holding company structure

–anticipated effects of the proposed spinoff of Seaport Entertainment, a newly formed division comprising our entertainment-related assets in New York and Las Vegas—including the Seaport in Lower Manhattan and the Las Vegas Aviators® Triple-A Minor League Baseball team, as well as the Company’s ownership stake in Jean-Georges Restaurants and its 80% interest in the air rights above the Fashion Show Mall (Seaport Entertainment)

– impact of technology on our operations and business

– expected performance of our segments

– expected commencement and completion for property developments and timing of sales or rentals of certain properties

– estimates of our future liquidity, development opportunities, development spending and management plans

– the potential impact of a resurgence of the COVID-19 pandemic on our business, our tenants and the economy in general, and our ability to accurately assess and predict such impacts on the financial condition, results of operations, cash flows, and performance of our Company; and

– descriptions of assumptions underlying or relating to any of the foregoing.

Some of the risks, uncertainties, and other important factors that may affect future results or cause actual results to differ materially from those expressed or implied by forward-looking statements include:

–~~the~~our ~~cyclical~~ability ~~nature~~to ofsatisfy ~~residential~~the ~~and~~necessary ~~commercial~~conditions ~~building~~ and ~~changes~~complete inthe ~~economic,~~spinoff ~~real~~on ~~estate,~~a timely basis (or ~~other~~at ~~conditions~~all)

–~~macroeconomic~~our ~~conditions~~ability ~~such~~to asrealize ~~volatility in capital markets, and a prolonged recession in~~ the ~~national~~anticipated ~~economy,~~benefits ~~including~~of ~~any adverse business or economic conditions in~~ the ~~homebuilding, condominium-development, retail and office sectors~~spinoff

–~~our~~the ~~inability~~effects toof ~~obtain~~the ~~operating~~spinoff ~~and~~on ~~development capital, including~~ our ~~inability~~ongoing ~~to obtain or refinance debt capital from lenders and the capital markets~~business

–macroeconomic conditions such as volatility in capital markets, and a prolonged recession in the national economy, including any adverse business or economic conditions in the homebuilding, condominium-development, retail, and office sectors

–general inflation, including core and wage inflation; commodity and energy price and currency volatility; as well as monetary, fiscal, and policy interventions in anticipation of our reaction to such events

–our inability to obtain operating and development capital for our properties, including our inability to obtain or refinance debt capital from lenders and the capital markets

–rising interest rates and inflation

–the availability of debt and equity capital

–our continuing ability to obtain operating and development capital on favorable terms, or at all

–our ability to compete effectively, including the potential impact of heightened competition for tenants and potential decreases in occupancy at our properties

–our ability to complete the proposed spinoff of Seaport Entertainment on the timing contemplated by us (or that, if completed, the separation of the Seaport Entertainment from the Company will have the anticipated effect on each of the two separated entities)

–our ability to successfully identify, acquire, develop and/or manage properties on terms that are favorable to us

–potential increases in real estate construction costs, including construction cost increases as the result of natural disasters or trade disputes and tariffs on goods imported in the United States

–potential defaults by purchasers on their obligations to purchase our condominiums

HHC 2023 FORM 10-Q | 34

MANAGEMENT’S NARRATIVE ANALYSIS Table of Contents

–extreme weather conditions or climate change, including natural disasters, that may cause property damage or interrupt business

–the impact of water and electricity shortages ~~on our business, financial condition, and results of operations~~

–contamination of our ~~properties~~property by hazardous or toxic substances

–terrorist activity, acts of violence, or breaches of our data security

–losses that are not insured or ~~that~~ exceed the applicable insurance limits

–our ability to lease new or redeveloped space

–our ability to obtain the necessary governmental permits for the development of our properties and necessary regulatory approvals pursuant to an extensive entitlement process involving multiple and overlapping regulatory jurisdictions, which often require discretionary action by local governments

–increased construction costs exceeding our original estimates, delays or overruns, claims for construction defects, or other factors affecting our ability to develop, redevelop or construct our properties

HHC 2024 FORM 10-Q | 29


MANAGEMENT’S NARRATIVE ANALYSIS			Table of Contents

–mismatch of supply and demand, including interruptions of supply lines

–regulation of the portion of our business that is dedicated to the formation and sale of condominiums, including regulatory filings to state agencies, additional entitlement processes, and requirements to transfer control to a condominium association’s board of directors in certain situations

–fluctuations in regional and local economies, the impact of ~~rising~~changes in interest rates on residential housing and condominium markets, local real estate conditions, tenant rental rates, and competition from competing retail properties and the internet

–inherent risks related to disruption of information technology networks and related systems, including cyber security attacks

–our ability to attract and retain key personnel

–our ability to collect rent and attract tenants

–our ~~ability to manage and service our debt and comply with related debt covenants~~indebtedness, ~~restrictions, and limitations,~~ including our $750,000,000 5.375% Senior Notes due 2028, $650,000,000 4.125% Senior Notes due 2029 and $650,000,000 4.375% Senior Notes due 2031, contain restrictions that may limit our ability to operate our business

–our directors’ involvement or interests in other businesses, including real estate activities and investments

–our inability to control certain of our properties due to the joint ownership of such property and our inability to successfully attract desirable strategic partners

–~~the~~catastrophic ~~impact~~events ofor ageopolitical ~~resurgence~~conditions, ofsuch ~~the~~as ~~COVID-19~~international ~~pandemic~~armed ~~on our business~~conflicts, ~~our~~or ~~tenants~~a ~~and~~resurgence of the ~~economy~~COVID-19 inpandemic; ~~general, including as described above~~and

–catastrophic events or geo-political conditions, such as international armed conflicts, the COVID-19 pandemic and resurgence of different variants that may disrupt our business

–other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the SEC

Although we presently believe that the plans, expectations, and anticipated results expressed in or suggested by the forward-looking statements contained in or incorporated by reference into this Quarterly Report are reasonable, all forward-looking statements are inherently subjective, uncertain, and subject to change, as they involve substantial risks and uncertainties, including those beyond our control. New factors emerge from time to time, and it is not possible for us to predict the nature, or assess the potential impact, of each new factor on our business. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any of our forward-looking statements for events or circumstances that arise after the statement is made, except as otherwise may be required by law.

The above list of risks and uncertainties is only a summary of some of the most important factors and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included in our ~~2022~~2023 Annual Report. The risk factors contained in our ~~2022~~2023 Annual Report are updated by us from time to time in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings that we make with the SEC.

HHC ~~2023~~2024 FORM 10-Q | 3530


MANAGEMENT’S NARRATIVE ANALYSIS OVERVIEW			Table of Contents


OVERVIEW


Description of Business

Our award-winning assets include one of the nation's largest portfolios of MPCs spanning approximately 101,000 gross acres, as well as operating properties, strategic developments, and other unique assets across ~~seven~~six states from New York to Hawai‘i. We create some of the most sought-after communities in the country by curating an environment tailored to meet the needs of our residents and tenants. Our unique business model allows us to drive outsized risk-adjusted returns while maintaining a sharp focus on sustainability to ensure our communities are equipped with the resources to last several decades.

We operate through four business segments: Operating Assets, MPCs, Strategic Developments, and Seaport. We create a unique and continuous value-creation cycle through operational and financial synergies associated with our three primary business segments of Operating Assets, MPCs, and Strategic Developments. In our MPC segment, we plan, develop, and manage small cities and large-scale, mixed-use communities, in markets with strong long-term growth fundamentals. This business focuses on the horizontal development of residential land. The improved acreage is then sold to homebuilders who build and sell homes to new residents. New homeowners create demand for commercial developments, such as retail, office, and hospitality offerings. We build these commercial properties through Strategic Developments at the appropriate time using the cash flow harvested from the sale of land to homebuilders, which helps mitigate development risk. Once the commercial developments are completed, the assets transition to Operating Assets, which increase recurring Net Operating Income (NOI), further funding our Strategic Developments. New office, retail, and other commercial amenities make our MPC residential land more appealing to buyers and increase the velocity of land sales at premiums that typically exceed the broader market. This increased demand for residential land generates more cash flow from MPCs, thus continuing the value-creation cycle. Our fourth business segment, the Seaport, is one of the few multi-block districts largely under private management by a single owner in New York City. This historic waterfront area is being revitalized and enhanced into a mixed-use neighborhood featuring unique culinary and entertainment offerings.

In addition to the required presentations using accounting principles generally accepted in the United States (GAAP), we use certain non-GAAP performance measures, such as NOI. See the Operating Assets and Seaport sections below for the reconciliation of this GAAP to non-GAAP financial measure and a statement indicating why management believes the non-GAAP financial measure provides useful information for investors. Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our consolidated financial statements, and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.

~~New~~Seaport ~~Holding Company Structure~~Entertainment On ~~July~~October 175, 2023, ~~HHC~~Howard ~~announced~~Hughes ~~that~~Holdings ~~its~~Inc. ~~Board~~(HHH) ofannounced ~~Directors authorized~~ the ~~creation~~intent ofto form a ~~holding~~new ~~company~~division, ~~structure.~~Seaport ~~The~~Entertainment, ~~Company believes~~ that ~~the~~is ~~reorganization~~expected ~~will~~to ~~promote~~include the ~~growth~~Company’s ofentertainment-related ~~its~~assets ~~businesses~~in byNew ~~providing~~York ~~additional~~and ~~flexibility~~Las toVegas, ~~fund~~including ~~future~~the ~~investment~~Seaport ~~opportunities~~in ~~and~~Lower toManhattan ~~segregate assets~~ and ~~related~~the ~~liabilities~~Las inVegas ~~separate~~Aviators ~~subsidiaries.~~Triple-A OnMinor ~~August~~League ~~11,~~Baseball ~~2023~~team, ~~upon~~as ~~the~~well ~~consummation~~as of the ~~transaction,~~Company’s ~~Howard~~ownership ~~Hughes~~stake ~~Holdings~~in ~~Inc.~~Jean-Georges ~~(HHH),~~Restaurants ~~the~~and ~~new~~an ~~parent~~interest ~~holding~~in ~~company,~~and ~~replaced~~to ~~HHC~~80% asof the ~~public~~air ~~company~~rights ~~trading~~above on the ~~New~~Fashion ~~York~~Show ~~Stock~~Mall ~~Exchange~~in ~~under~~Las ~~the ticker symbol “HHH~~Vegas.”

Seaport Entertainment On October 5, 2023, HHH announced the intent to form a new division, Seaport Entertainment, that is expected to include HHC’s entertainment-related assets in New York and Las Vegas, including the Seaport in Lower Manhattan and the Las Vegas Aviators Triple-A Minor League Baseball team, as well as the HHC’s ownership stake in Jean-Georges Restaurants and its 80% interest in the air rights above the Fashion Show Mall in Las Vegas.

HHC ~~2023~~2024 FORM 10-Q | 3631


MANAGEMENT’S NARRATIVE ANALYSIS OVERVIEW			Table of Contents


First Quarter 2024 Highlights

Comparison of the three months ended March 31, 2024, to the three months ended March 31, 2023

Total Company

–Net income attributable to common stockholders decreased to a net loss of $51.9 million for the current quarter, compared to a net loss of $22.7 million for the prior-year period, primarily attributed to reduced MPC commercial land sales, lower equity earnings from The Summit, and increased G&A expenses associated with the anticipated spinoff of Seaport Entertainment.

–We continue to maintain a strong liquidity position with $462.7 million of cash and cash equivalents, $1.0 billion of undrawn lender commitment available to be drawn for property development and limited near-term debt maturities.

Operating Assets

–Operating Assets NOI totaled $58.3 million in the current quarter, a $4.0 million increase compared to $54.3 million in the prior-year period.

–Office NOI increased $2.8 million, primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion, partially offset by decreases related to lower occupancy and a tenant bankruptcy at 1725 Hughes Landing.

–Multi-family NOI increased $1.1 million, primarily due to continued lease-up at our newer properties, Marlow in Downtown Columbia and Starling at Bridgeland, partially offset by winter-weather-related insurance recoveries in 2023.

MPC

–MPC Earnings Before Tax (EBT) totaled $24.3 million in the current quarter, a $38.1 million decrease compared to $62.4 million in the prior-year period.

–The decrease in EBT was primarily due to lower equity earnings at The Summit and lower commercial MPC sales, net of MPC costs at Bridgeland.

Seaport

–Seaport NOI totaled a loss of $8.6 million in the current quarter, a $3.0 million decrease compared to a loss of $5.6 million in the prior-year period. This change was primarily due to reduced restaurant revenue at Pier 17 and lower sponsorship revenue, partially offset by improved rental revenue from the Fulton Market Building, which is now 100% occupied.

–Seaport NOI excludes the impact of the Company’s equity ownership interest in the Tin Building by Jean-Georges managed business. Tin Building by Jean-Georges NOI was a loss of $8.7 million in the current quarter and a loss of $9.2 million in the prior-year period. See Seaport segment discussion for additional detail.

Strategic Developments

–Strategic Developments EBT totaled a loss of $5.4 million in the current quarter, a $2.0 million decrease compared to a loss of $3.4 million in the prior-year period.

–The decrease in EBT was primarily attributable to a $2.4 million decrease in profits from condominium sales, with no sales closed during the current quarter, compared to closings of one unit at Kō'ula and four units at ‘A‘ali‘i during the prior-year period. The lower volume of condominium closings is expected as our completed towers are 100.0% sold and the next tower, Victoria Place, is not scheduled for completion until late 2024.

–We launched public pre-sales for The Launiu, our eleventh condominium project at Ward Village, in February 2024. As of March 31, 2024, we have pre-sold 182 units, representing 37.5% of available units.

–We contracted 14 units at The Park Ward Village and Kalae during the current quarter. As of March 31, 2024, The Park Ward Village was 94.9% pre-sold and Kalae was 90.0% pre-sold. Construction on Kalae is expected to begin in the second quarter of 2024.

–We launched public pre-sales at The Ritz Carlton Residences in The Woodlands in late March 2024. As of March 31, 2024, we have pre-sold 56 units, representing 50.5% of available units.

–During the current quarter, we commenced construction on Village Green at Bridgeland Central, a retail property in Bridgeland.

–We incurred a $3.0 million charge during the current quarter to fund the final remediation expenditures related to window construction defects at Waiea in Ward Village. The Company continues to vigorously pursue recovery of all Waiea remediation costs from the general contractor and other responsible parties.

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MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents


RESULTS OF OPERATIONS

Comparison of the nine months ended September 30, 2023, to the nine months ended September 30, 2022

Net income attributable to common stockholders decreased $717.9 million to a loss of $586.1 million for the nine months ended September 30, 2023, compared to the prior-year period.

–Seaport EBT decreased $733.4 million, primarily due to a $709.5 million impairment charge related to the Seaport segment recognized in the current period. Excluding the impact of the impairment, Seaport Earnings Before Tax (EBT) decreased $23.9 million due to an increase in equity losses primarily related to operating losses for the Tin Building by Jean-Georges which opened in the third quarter of 2022, an increase in depreciation expense related to the opening of the Tin Building landlord asset in the third quarter of 2022, and a decrease in total revenues, net of operating costs primarily due to fewer private events, the absence of certain restaurant concepts, and poor weather conditions in the current year and COVID-related recoveries at the Fulton Market Building in the prior year, partially offset by an increase in rental revenue driven by the opening of the Tin Building.

–Strategic Developments EBT decreased $145.6 million primarily attributable to a decrease in net condominium sales due to the timing of condominium closings and recent pricing reductions at ‘A‘ali‘i and Kō'ula to facilitate the close-out of remaining units, as well as additional remediation expenditures at Waiea.

–Operating Assets EBT decreased $31.3 million primarily due to an increase in interest expense primarily due to new financings secured by our operating assets and higher interest on variable-rate debt, a decrease in equity earnings related to the change in value of derivative instruments of certain equity investments and the sale of 110 North Wacker in the first quarter of 2022, and an increase in depreciation expense and real estate taxes. These decreases were offset by an increase in gain on sale of real estate primarily related to the sale of two self-storage properties in The Woodlands.

–MPC EBT decreased $4.2 million primarily due to lower residential and commercial land sales, net of costs, at Summerlin due to the timing of superpad sales in the current year, and lower residential land sales at The Woodlands Hills, partially offset by higher commercial and residential land sales at Bridgeland, higher residential land sales at Aria Isle in The Woodlands, and higher equity earnings at The Summit.

–These decreases were partially offset by a $197.4 million decrease in net expenses related to Corporate income, expenses, and other items primarily due to a decrease in income tax expense.

See segment discussions for more detail about the changes described above.

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MANAGEMENT’S NARRATIVE ANALYSISRESULTS OF OPERATIONS Table of Contents


Operating Assets

Segment EBT Segment EBT for Operating Assets is presented below:

Operating Assets Segment EBT

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Rental revenue

~~99,843~~

~~91,916~~

~~7,927~~

~~289~~101,~~914~~200

~~283~~92,~~804~~475

68,~~110~~725

Other land, rental, and property revenues

~~17,031~~

~~17,577~~

~~(546)~~

498,~~312~~952

438,~~938~~450

~~5,374~~502

Total revenues

~~116,874~~

~~109,493~~

~~7,381~~

~~339~~110,~~226~~152

~~327~~100,~~742~~925

119,~~484~~227

Operating costs

~~(40,016)~~

~~(37,429)~~

~~(2,587)~~

(~~115~~37,~~591~~477)

(~~107~~35,~~319~~420)

(82,~~272~~057)

Rental property real estate taxes

~~(14,369)~~

~~(11,395)~~

~~(2,974)~~

(4313,~~278~~875)

(3814,~~634~~580)

~~(4,644)~~705

(Provision for) recovery of doubtful accounts

~~(1,401)~~

~~(170)~~

~~(1,231)~~

~~1,032~~(43)

(12,~~005)~~401

(2,~~037~~444)

Total operating expenses

~~(55,786)~~

~~(48,994)~~

~~(6,792)~~

(~~157~~51,~~837~~395)

(~~146~~47,~~958~~599)

(103,~~879~~796)

Segment operating income (loss)

~~61,088~~

~~60,499~~

~~589~~

~~181~~58,~~389~~757

~~180~~53,~~784~~326

~~605~~5,431

Depreciation and amortization

~~(43,127)~~

~~(37,714)~~

~~(5,413)~~

(~~123~~44,~~637~~156)

(~~115~~39,~~143~~632)

(84,~~494~~524)

Interest income (expense), net

~~(31,884)~~

~~(23,340)~~

~~(8,544)~~

(9133,~~080~~476)

(6428,~~776~~911)

(264,~~304~~565)

Other income (loss), net

~~(244)~~

~~421~~

~~(665)~~

~~1,998~~408

~~(57)~~2,282

2(1,~~055~~874)

Equity in earnings (losses) from unconsolidated ventures

~~1,364~~

~~4,132~~

~~(2,768)~~

5,~~311~~817

211,~~898~~905

~~(16~~3,~~587)~~912

Gain (loss) on sale or disposal of real estate and other assets, net

~~16,050~~

—

~~16,050~~

204,~~764~~794

4,~~018~~730

~~16,746~~64

Gain (loss) on extinguishment of debt

—

(645)

645

Segment EBT

(7,856)

(6,300)

(1,556)

Segment EBT

3,247

3,998

(751)

(5,255)

26,079

(31,334)

For the three months ended ~~September~~March 3031, ~~2023~~2024:

Operating Assets segment EBT decreased $01.86 million compared to the prior-year period primarily due to the following:

–Interest expense increased $84.56 million primarily due to ~~new~~increased ~~financings~~borrowings on construction loans secured by our ~~Operating~~operating assets.

–Depreciation expense increased $5.4.5 million primarily related to new assets placed in service ~~since~~during ~~the beginning of the third quarter of 2022~~2023.

–~~Real~~Other ~~estate~~income ~~taxes~~decreased ~~increased~~ $31.09 million primarily due to ~~increases~~winter-weather-related ininsurance ~~estimated~~recoveries ~~property valuations~~ in ~~the Houston region~~2023.

–Equity earnings decreased $2.8 million primarily as a result of a decrease related to the change in value of certain derivative instruments.

These decreases to EBT were partially offset by the following:

–~~Gain~~Equity onearnings ~~sale~~increased of$3.9 million ~~real~~primarily ~~estate~~as a result of a $162.14 million increase related to the ~~sale~~change ~~of two self-storage properties~~ in ~~The~~value ~~Woodlands~~of incertain ~~the~~derivative ~~third quarter of 2023~~instruments.

–Total revenues, net of Total operating ~~costs~~expenses increased $45.84 million primarily due to increased leasing activity across ~~the~~our portfolio ~~of existing and newly completed properties~~, ~~partially~~primarily ~~offset by decreases~~ related to ~~the~~9950 ~~sales~~Woodloch ofForest ~~Creekside Park Village~~ and ~~Lake~~our ~~Woodlands~~newly ~~Crossing~~completed inmulti-family ~~2022, as well as increased insurance costs in 2023~~properties.

For the nine months ended September 30, 2023:

Operating Assets segment EBT decreased $31.3 million compared to the prior-year period primarily due to the following:

–Interest expense increased $26.3 million primarily due to new financings secured by our operating assets and higher interest rates on variable-rate debt.

–Equity earnings decreased $16.6 million primarily as a result of a $9.6 million decrease related to the change in value of certain derivative instruments and a $4.9 million decrease related to the sale of 110 North Wacker in the first quarter of 2022. This decrease is due to the release of our share of accumulated other comprehensive income related to 110 North Wacker’s derivative instruments upon the sale in 2022.

–Depreciation expense increased $8.5 million primarily related to new assets placed in service since the beginning of the third quarter of 2022.

–Real estate taxes increased $4.6 million primarily due to new assets placed in service and increases in estimated property valuations in the Houston region.

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MANAGEMENT’S NARRATIVE ANALYSISRESULTS OF OPERATIONS Table of Contents

These decreases to EBT were partially offset by the following:

–Gain on sale of real estate increased $16.7 million due to the sales of two self-storage properties in The Woodlands and certain properties in Ward Village in 2023, compared to the sale of Outlet Collection at Riverwalk in 2022.

–Total revenues, net of operating costs increased $3.2 million primarily due to increased leasing activity across our portfolio of existing and newly completed properties as well as one-time lease termination fees received in 2023. These increases were partially offset by decreases related to the COVID-related tenant recoveries at Ward Village in the prior year, the closure of two Ward Village retail centers to make way for The Park Ward Village and Ulana Ward Village condominiums, the sales of Creekside Park Village and Lake Woodlands Crossing in 2022, and increased insurance costs in 2023.

Net Operating Income In addition to the required presentations using GAAP, we use certain non-GAAP performance measures, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer companies more meaningful. Management continually evaluates the usefulness, relevance, limitations and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.

We define NOI as operating revenues (rental income, tenant recoveries, and other revenue) less operating expenses (real estate taxes, repairs and maintenance, marketing, and other property expenses). NOI excludes straight-line rents and amortization of tenant incentives, net; interest expense, net; ground rent amortization; demolition costs; other income (loss); depreciation and amortization; ~~depreciation;~~ development-related marketing ~~cost~~costs; gain on sale or disposal of real estate and other assets, net; loss on extinguishment of debt; provision for impairment; and equity in earnings from unconsolidated ventures.

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MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

We believe that NOI is a useful supplemental measure of the performance of our Operating Assets and Seaport segments because it provides a performance measure that reflects the revenues and expenses directly associated with owning and operating real estate properties. We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that property-specific factors such as rental and occupancy rates, tenant mix, and operating costs have on our operating results, gross margins, and investment returns.

A reconciliation of Operating Assets segment EBT to Operating Assets NOI is presented in the table below. Refer to the Seaport section for a reconciliation of Seaport segment EBT to Seaport NOI.

Operating Assets NOI	~~Three Months Ended September 30,~~		Three Months Ended March 31,				~~Nine Months Ended September 30,~~
thousands	~~2023~~		~~2022~~		~~$ Change~~		~~2023~~2024		~~2022~~2023		$ Change
Total Operating Assets segment EBT	$	~~3,247~~	$	~~3,998~~	$	~~(751)~~	$	(57,~~255~~856)	$	26(6,~~079~~300)	$	(311,~~334~~556)
Add back:
Depreciation and amortization	~~43,127~~		~~37,714~~		~~5,413~~		~~123~~44,~~637~~156		~~115~~39,~~143~~632		84,~~494~~524
Interest (income) expense, net	~~31,884~~		~~23,340~~		~~8,544~~		9133,~~080~~476		6428,~~776~~911		264,~~304~~565
Equity in (earnings) losses from unconsolidated ventures	~~(1,364)~~		~~(4,132)~~		~~2,768~~		(5,~~311~~817)		(211,~~898~~905)		16(3,~~587~~912)
(Gain) loss on sale or disposal of real estate and other assets, net	~~(16,050)~~		—		~~(16,050)~~		(204,~~764~~794)		(4,~~018~~730)		(~~16,746~~64)
(Gain) loss on extinguishment of debt	—		—		—		—		645		(645)
Impact of straight-line rent							(847)		(1,113)		266
Impact of straight-line rent	(470)		(1,744)		1,274		(2,664)		(7,283)		4,619
Other							(54)		(185)		131
Other	336		(519)		855		420		(312)		732
Operating Assets NOI							$	58,264	$	54,310	$	3,954
Operating Assets NOI	$	60,710	$	58,657	$	2,053	$	181,143	$	173,132	$	8,011

The table below presents Operating Assets NOI by property type:

Operating Assets NOI by Property Type	~~Three Months Ended September 30,~~		Three Months Ended March 31,				~~Nine Months Ended September 30,~~
thousands	~~2023~~		~~2022~~		~~$ Change~~		~~2023~~2024		~~2022~~2023		$ Change
Office	$	~~29,326~~	$	~~28,540~~	$	~~786~~	$	9030,~~720~~598	$	8327,~~338~~785	$	72,~~382~~813
Retail	~~12,783~~		~~12,293~~		~~490~~		3914,~~904~~567		3814,~~447~~618		~~1,457~~(51)
Multi-family	~~13,817~~		~~11,725~~		~~2,092~~		3913,~~512~~777		3412,~~710~~633		41,~~802~~144
Other	~~4,615~~		~~5,316~~		~~(701)~~		~~10,308~~(623)		~~12,762~~(823)		~~(2,454)~~200
Dispositions	169		783		(614)		699		3,875		(3,176)
Redevelopments (a)							—		(10)		10
Operating Assets NOI	$	60,710	$	58,657	$	2,053	$	181,143	$	173,132	$	8,011
Dispositions (a)							(55)		107		(162)
Operating Assets NOI							$	58,264	$	54,310	$	3,954

~~HHC~~(a)Properties ~~2023~~that ~~FORM~~were ~~10-Q | 39~~transferred to our Strategic Developments segment for redevelopment and properties that were sold are shown separately for all periods presented.

For the three months ended March 31, 2024:

Operating Assets NOI increased $4.0 million compared to the prior-year period primarily due to the following:

–Office NOI increased $2.8 million primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion, partially offset by decreases related to lower occupancy and a tenant bankruptcy at 1725 Hughes Landing.

–Multi-family NOI increased $1.1 million primarily due to continued lease-up at our newer properties, Marlow in Downtown Columbia and Starling at Bridgeland, partially offset by winter-weather-related insurance recoveries in 2023.

–These increases were partially offset by a $0.2 million decrease primarily related to the disposition of two self-storage properties in The Woodlands in 2023.

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MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

For the three months ended September 30, 2023:

Operating Assets NOI increased $2.1 million compared to the prior-year period primarily due to the following:

–Multi-family NOI increased $2.1 million primarily driven by continued lease-up at our newer properties, Marlow in Downtown Columbia and Starling at Bridgeland, and rent growth at our properties in The Woodlands, partially offset by initial operating losses at Tanager Echo in Summerlin.

–Office NOI increased $0.8 million primarily driven by continued lease-up activity and abatement expirations at various properties in The Woodlands, most notably at 9950 Woodloch Forest and Lake Front North. These increases were partially offset by tenant vacancies at various properties in Downtown Columbia and initial operating losses from 1700 Pavilion in Summerlin.

–Retail NOI increased $0.5 million with modest improvements in all regions.

These increases to NOI were partially offset by the following:

–NOI decrease of $0.6 million primarily related to the retail asset dispositions of Creekside Village Green and Lake Woodlands Crossing in 2022 and two self-storage properties in The Woodlands in 2023.

For the nine months ended September 30, 2023:

Operating Assets NOI increased $8.0 million compared to the prior-year period primarily due to the following:

–Office NOI increased $7.4 million primarily due to one-time lease termination fees, continued lease-up activity, and abatement expirations at various properties in The Woodlands, most notably at 9950 Woodloch Forest and Lake Front North, partially offset by decreases related to rent abatements at 3 Waterway Square, lower occupancy at One Hughes Landing and various properties in Downtown Columbia, and initial operating losses from 1700 Pavilion in Summerlin.

–Multi-family NOI increased $4.8 million primarily driven by winter weather-related insurance recoveries, continued lease-up at our newer properties, Marlow in Downtown Columbia and Starling at Bridgeland, and rent growth across our portfolio.

–Retail NOI increased $1.5 million primarily driven by tenant upgrades and retail sales growth in Downtown Summerlin, as well as increased leasing in The Woodlands, partially offset by COVID-related tenant recoveries at Ward Village in the prior year, as well as the closure of two Ward Village retail centers to make way for The Park Ward Village condominiums.

–These increases were partially offset by a $3.2 million decrease related to the retail asset dispositions of Creekside Village Green, Lake Woodlands Crossing, and Outlet Collection at Riverwalk in 2022 and two self-storage properties in The Woodlands in 2023.

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MANAGEMENT’S NARRATIVE ANALYSISRESULTS OF OPERATIONS Table of Contents


Master Planned Communities

Segment EBT ~~Segment~~The ~~EBT~~following ~~for~~table ~~MPC~~presents ~~Assets~~segment isEBT ~~presented~~for ~~below~~MPC:

MPC Segment EBT

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Master Planned Community land sales (a)

~~75,378~~

~~52,585~~

~~22,793~~

~~177~~32,~~045~~415

~~199~~59,~~032~~361

(2126,~~987~~946)

Other land, rental, and property revenues

~~4,574~~

~~6,751~~

~~(2,177)~~

133,~~315~~894

163,~~139~~643

~~(2,824)~~251

Builder price participation (b)

~~15,847~~

~~18,852~~

~~(3,005)~~

4512,~~763~~566

5114,~~819~~009

(61,~~056~~443)

Total revenues

~~95,799~~

~~78,188~~

~~17,611~~

~~236~~48,~~123~~875

~~266~~77,~~990~~013

(3028,~~867~~138)

Master Planned Communities cost of sales

~~(28,264)~~

~~(19,355)~~

~~(8,909)~~

(6612,~~134~~904)

(7522,~~304~~003)

9,~~170~~099

Operating costs

~~(12,975)~~

~~(11,700)~~

~~(1,275)~~

(3712,~~534~~145)

(3712,~~783~~348)

~~249~~203

Total operating expenses

~~(41,239)~~

~~(31,055)~~

~~(10,184)~~

(~~103~~25,~~668~~049)

(~~113~~34,~~087~~351)

9,~~419~~302

Segment operating income (loss)

~~54,560~~

~~47,133~~

~~7,427~~

~~132~~23,~~455~~826

~~153~~42,~~903~~662

(2118,~~448~~836)

Depreciation and amortization

~~(103)~~

~~(104)~~

(~~316~~110)

(~~286~~107)

(303)

Interest income (expense), net

~~16,031~~

~~13,492~~

~~2,539~~

4915,~~004~~246

3515,~~697~~812

~~13,307~~(566)

Other income (loss), net

—

~~(103)~~—

23(103)

~~(126)~~103

Equity in earnings (losses) from unconsolidated ventures

~~14,310~~

~~14,862~~

~~(552)~~

21(14,~~056~~711)

164,~~990~~108

4(18,~~066~~819)

Segment EBT

~~84,798~~

~~75,383~~

~~9,415~~

~~202~~24,~~096~~251

~~206~~62,~~327~~372

(438,~~231~~121)

(a)MPC land sales include deferred revenue from land sales closed in a previous period that met criteria for recognition in the current period and excludes amounts deferred from current period land sales that do not yet meet the recognition criteria.

(b)Builder price participation revenue is earned when a developer that acquired land from ~~Howard~~us ~~Hughes~~ develops and sells a home to an end user at a price higher than a predetermined breakpoint. The excess over the breakpoint is shared between ~~Howard~~us ~~Hughes~~ and the developer at the time of closing on the sale of the home based on a previously agreed-upon percentage. This revenue fluctuates based upon the number and the prices of homes closed that qualify for builder price participation payments.

The following table presents MPC segment EBT by MPC:

MPC Segment EBT by MPC	~~Three Months Ended September 30,~~		Three Months Ended March 31,				~~Nine Months Ended September 30,~~
thousands	~~2023~~		~~2022~~		~~$ Change~~		~~2023~~2024		~~2022~~2023		$ Change
Bridgeland	$	~~22,535~~	$	~~15,910~~	$	~~6,625~~	$	7617,~~850~~247	$	5231,~~139~~104	$	24(13,~~711~~857)
Columbia (a)	—		(738)		738		—		(1,095)		1,095
Summerlin							7,309		28,390		(21,081)
Summerlin	62,052		58,141		3,911		116,996		152,331		(35,335)
Teravalis (a)							943		(1,009)		1,952
Teravalis (b)	(788)		(646)		(142)		(2,754)		(968)		(1,786)
The Woodlands							(2,350)		2,295		(4,645)
The Woodlands	(745)		(1,769)		1,024		4,613		(9,969)		14,582
The Woodlands Hills							1,102		1,592		(490)
The Woodlands Hills	1,744		4,485		(2,741)		6,391		13,889		(7,498)
Segment EBT							$	24,251	$	62,372	$	(38,121)
Segment EBT	$	84,798	$	75,383	$	9,415	$	202,096	$	206,327	$	(4,231)
Floreo (b)							$	2,425	$	(952)	$	3,377
Floreo (c)	$	(1,039)	$	(842)	$	(197)	$	(2,949)	$	(1,291)	$	(1,658)

(a)~~Columbia~~As ~~MPC~~of ~~land~~March 31, ~~development~~2024, isthe ~~complete~~Company ~~and~~owns ~~the~~an ~~sale~~88.0% ofinterest ~~remaining~~and ~~land~~consolidates orTeravalis. ~~development~~For of additional ~~commercial~~detail, ~~assets~~refer ~~will~~to ~~occur~~Note as1 ~~the~~- ~~market~~Presentation ~~dictates.~~of AsFinancial ~~such,~~Statements ~~the~~and ~~remaining~~Significant ~~Columbia~~Accounting ~~land~~Policies ~~was~~in ~~transferred~~the Notes to ~~the~~Condensed ~~Strategic~~Consolidated ~~Developments~~Financial ~~segment~~Statements inunder ~~the~~Item ~~first~~1 ~~quarter~~ of ~~2023~~this Form 10-Q.

(b)AsThese ofamounts ~~September 30,~~represent ~~2023, the Company owns an 88.0~~100% ~~interest~~of ~~and~~Floreo ~~consolidates Teravalis~~EBT. ~~Teravalis~~The ~~EBT~~Company ~~also~~owns ~~includes~~a ~~the Company’s~~ 50% interest in Floreo,. ~~which~~Refer isto ~~accounted~~Note ~~for~~2 ~~under~~- ~~the~~Investments ~~equity~~in ~~method.~~Unconsolidated ~~For~~Ventures ~~additional~~in ~~detail,~~the ~~refer~~Notes to ~~Note~~Condensed 2Consolidated -Financial ~~Investments~~Statements inunder ~~Unconsolidated~~Item ~~Ventures~~1 ~~and~~of ~~Note~~this 3Form 10-Q ~~Acquisitions~~for ~~and~~a ~~Dispositions~~description inof the ~~Condensed~~joint ~~Consolidated~~venture ~~Financial~~and ~~Statements~~further discussion.

~~(c)This~~HHC ~~represents~~2024 ~~100%~~FORM ~~of Floreo EBT and is presented for informational purposes.~~10-Q | 35

HHC 2023 FORM 10-Q | 41


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

For the three months ended ~~September~~March 3031, ~~2023~~2024:

MPC Segment EBT ~~increased~~decreased $938.41 million compared to the prior-year period primarily due to the following:

~~Bridgeland~~Summerlin EBT ~~increased~~decreased $621.61 million compared to the prior-year period.

–~~MPC~~Equity earnings at The Summit decreased $20.6 million. Land and clubhouse unit sales, ~~net~~decreased ofin ~~MPC~~the ~~cost~~first quarter of ~~sales~~2024, ~~increased~~compared ~~$7.1 million~~to ~~primarily~~the prior-year period due to ~~the~~low ~~following~~remaining ~~activity:~~inventory.

–~~increase~~Builder inprice ~~residential~~participation ~~acres~~decreased ~~sold, with 38~~$2.4 million ~~acres~~as ~~sold~~fewer athomes anwere ~~average~~closed ~~price~~with ofsales ~~$566,000~~prices ~~per~~over ~~acre in~~ the ~~third~~predetermined ~~quarter~~breakpoint ofnecessary ~~2023,~~for ~~compared~~participation torevenue ~~20.8 acres sold at an average price of $520,000 per acre~~ in the ~~prior-year~~current period.

–~~decrease~~MPC ~~in commercial acres sold~~sales, ~~with~~net ~~12.5 acres sold at an average price~~ of ~~$262,000~~MPC ~~per~~cost ~~acre in the third quarter~~ of ~~2023,~~sales ~~compared~~increased ~~to 16~~$0.69 million ~~acres~~primarily ~~sold~~due atto ~~an average price of $436,000 per acre in~~ the ~~prior-year~~following ~~period~~activity:

~~Summerlin~~–increase ~~EBT~~due ~~increased~~to $3.93 million more revenue recognized out of deferred revenue in the first quarter of 2024, compared to the prior-year period.

–~~MPC~~decrease ~~sales~~in custom lots sold, ~~net~~with ofno ~~MPC~~lots ~~cost~~sold in the first quarter of ~~sales~~2024, ~~increased~~compared to one lot sold at a price of $72.40 million ~~primarily~~per ~~due~~lot toin the ~~following~~prior-year ~~activity:~~period. The lot sold in the prior-year period was the last custom lot currently available.

~~–increase~~Bridgeland inEBT ~~superpad~~decreased ~~acres sold, with 39.2 acres sold at an average price of~~ $113.39 million ~~per acre in the third quarter of 2023,~~ compared to ~~23.0 acres sold at an average price of $1.2 million per acre in~~ the prior-year period. Superpad sales, which typically include large 10- to 25-acre parcels, are based on current homebuilder demand and can vary from quarter to quarter. With new home sales rising year-to-date and increased demand for new acreage, we expect a material increase in superpad sales in the fourth quarter of 2023.

–~~Builder~~MPC ~~price~~sales, ~~participation~~net ~~decreased~~of ~~$2.3 million~~MPC ascost ~~fewer~~of ~~homes were closed with~~ sales ~~prices~~decreased ~~over~~$12.7 million ~~the~~primarily ~~predetermined~~due ~~breakpoint~~to ~~necessary for HHC participation revenue in~~ the ~~current~~following ~~quarter. This reflects price moderation from all-time highs in 2022.~~activity:

–~~Other~~decrease ~~land,~~in ~~rental,~~commercial ~~and~~acres ~~property~~sold ~~revenues~~partially ~~decreased~~offset $1by an increase in price per acre, with 3.~~7 million~~5 ~~primarily~~acres ~~due~~sold toat ~~lower~~an ~~deposit~~average ~~forfeitures~~price of $801,000 per acre in the ~~current~~first quarter of 2024, compared to 108.8 acres sold at an average price of $247,000 in the prior-year period

~~The~~–increase ~~Woodlands~~in ~~EBT~~residential ~~increased~~acres $1sold, with 30.~~0 million~~7 acres sold at an average price of $601,000 per acre in the first quarter of 2024, compared to 22.5 acres sold at an average price of $542,000 per acre in the prior-year period.

~~–MPC~~The ~~sales,~~Woodlands ~~net~~EBT ofdecreased ~~MPC cost of sales increased~~ $14.96 million ~~primarily~~compared ~~due~~ to the ~~following~~prior-year ~~activity:~~period.

–~~increase~~MPC ~~in residential acres sold~~sales, ~~with~~net ~~1.5~~of ~~acres~~MPC ~~sold~~cost inof ~~Aria~~sales ~~Isle,~~decreased ~~an exclusive gated community, at an average price of~~ $25.60 million ~~per~~primarily ~~acre~~due ~~in the third quarter of 2023, compared~~ to ~~no residential land sales in~~ the ~~prior-year~~following ~~period~~activity:

~~The~~–decrease ~~Woodlands~~in ~~Hills~~residential ~~EBT~~acres ~~decreased~~sold, with no acres sold in the first quarter of 2024, compared to 3.5 acres sold in Aria Isle, an exclusive gated community, at an average price of $2.79 million ~~compared~~per toacre in the prior-year period. The decrease in acres sold is expected as only one custom lot remains at Aria Isle.

~~–MPC~~The ~~sales,~~Woodlands ~~net~~Hills ofEBT ~~MPC cost of sales~~ decreased $20.5 million ~~primarily~~compared ~~due~~ to the ~~following~~prior-year ~~activity:~~period.

–~~decrease~~MPC ~~in residential acres sold partially offset by an increase in price per acre~~sales, ~~with~~net ~~5.2 acres sold at an average price~~ of ~~$440,000~~MPC ~~per~~cost ~~acre in the third quarter~~ of ~~2023,~~sales ~~compared~~decreased ~~to 15~~$1.40 million ~~acres~~primarily ~~sold~~due atto ~~an average price of $412,000 per acre in~~ the ~~prior-year~~following ~~period~~activity:

~~HHC~~–decrease ~~2023~~in ~~FORM~~residential 10acres sold partially offset by an increase in price per acre, with 0.4 acres sold at an average price of $538,000 per acre in the first quarter of 2024, compared to 4.9 acres sold at an average price of $431,000 per acre in the prior-~~Q | 42~~year period

Teravalis EBT increased $2.0 million compared to the prior-year period.

–Equity earnings at Floreo increased $1.7 million primarily related to the closings of the first Floreo land sales in the first quarter of 2024.

HHC 2024 FORM 10-Q | 36


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

For the nine months ended September 30, 2023:

MPC Segment EBT decreased $4.2 million compared to the prior-year period primarily due to the following:

Summerlin EBT decreased $35.3 million compared to the prior-year period.

–MPC sales, net of MPC cost of sales decreased $39.6 million primarily due to the following activity:

–decrease in superpad acres sold partially offset by an increase in price per acre, with 39.2 acres sold at an average price of $1.3 million for the nine months ended September 30, 2023, compared to 70.8 acres sold at an average price of $1.1 million per acre in the prior-year period. Superpad sales, which typically include large 10- to 25-acre parcels, are based on current homebuilder demand and can vary from quarter to quarter. With new home sales rising year-to-date and increased demand for new acreage, we expect a material increase in superpad sales in the fourth quarter of 2023.

–decrease in commercial acres sold, with no acres sold for the nine months ended September 30, 2023, compared to 16.6 acres sold at an average price of $1.6 million per acre in the prior-year period

–decrease in custom lots sold, with one lot sold at a price of $2.0 million for the nine months ended September 30, 2023, compared to four lots sold at a price of $2.2 million per lot in the prior-year period

–Builder price participation decreased $3.8 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for HHC participation revenue in the current period. This reflects price moderation from all-time highs in 2022.

–Equity earnings increased $4.9 million at The Summit due to increased land and clubhouse unit sales in the nine months ended September 30, 2023, compared to the prior-year period.

The Woodlands Hills EBT decreased $7.5 million compared to the prior-year period.

–MPC sales, net of MPC cost of sales decreased $6.5 million primarily due to the following activity:

–decrease in residential acres sold partially offset by an increase in price per acre, with 20.6 acres sold at an average price of $422,000 per acre for the nine months ended September 30, 2023, compared to 46.5 acres sold at an average price of $378,000 per acre in the prior-year period

–decrease in commercial acres sold, with no acres sold for the nine months ended September 30, 2023, compared to 8.0 acres sold at an average price of $175,000 per acre in the prior-year period

–Builder price participation decreased $1.2 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for HHC participation revenue in the current period. This reflects price moderation from all-time highs in 2022.

Bridgeland EBT increased $24.7 million compared to the prior-year period.

–MPC sales, net of MPC cost of sales increased $20.5 million primarily due to the following activity:

–increase in commercial acres sold, with 121.3 acres sold at an average price of $249,000 per acre for the nine months ended September 30, 2023, compared to 26.4 acres sold at an average price of $371,000 per acre in the prior-year period

–increase in residential acres sold, with 99.7 acres sold at an average price of $555,000 per acre for the nine months ended September 30, 2023, compared to 95.9 acres sold at an average price of $537,000 per acre in the prior-year period

The Woodlands EBT increased $14.6 million compared to the prior-year period.

–MPC sales, net of MPC cost of sales increased $12.8 million primarily due to the following activity:

–increase in residential acres sold, with 8.7 acres sold in Aria Isle, an exclusive gated community, at an average price of $2.6 million per acre for the nine months ended September 30, 2023, compared to no acres sold in the prior-year period

–increase in commercial acres sold, with 2.1 acres sold at an average price of $819,000 per acre for the nine months ended September 30, 2023, compared to no acres sold in the prior-year period

–Operating costs decreased $3.8 million due to higher legal fees in the prior year, primarily related to the flood litigation.

–Builder price participation decreased $1.3 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for HHC participation revenue in the current period. This reflects price moderation from all-time highs in 2022.

HHC 2023 FORM 10-Q | 43

MANAGEMENT’S NARRATIVE ANALYSISRESULTS OF OPERATIONS Table of Contents

MPC Net Contribution MPC Net Contribution is a non-GAAP financial measure derived from EBT, adjusted for certain items as discussed below. Management uses this measure because it captures current period performance through the velocity of sales, as well as current period development expenditures based upon demand at our MPCs, which varies depending upon the stage of the MPCs development lifecycle, and the overall economic environment. MPC Net Contribution is defined as MPC segment EBT, plus MPC cost of sales, Depreciation and amortization, and net collections from Special Improvement District (SID) bonds and Municipal Utility District (MUD) receivables, reduced by MPC development expenditures, land acquisitions, and Equity in earnings from unconsolidated ventures, net of distributions. MPC Net Contribution is not a GAAP-based operational metric and should not be used to measure operating performance of the MPC assets as a substitute for GAAP measures of such performance nor should it be used as a comparison metric with other comparable businesses.

ABelow is a reconciliation of segment EBT to MPC Net Contribution ~~is presented below~~:

MPC Net Contribution

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

MPC Segment EBT

84,798

75,383

9,415

202,096

206,327

(4,231)

MPC segment EBT

24,251

62,372

(38,121)

Plus:

Master Planned Communities cost of sales

~~28,264~~

~~19,355~~

~~8,909~~

6612,~~134~~904

7522,~~304~~003

(9,~~170~~099)

Depreciation and amortization

~~103~~

~~104~~

~~(1)~~

~~316~~110

~~286~~107

303

MUD and SID bonds collections, net (a)

~~4,237~~

~~4,987~~

~~(750)~~

~~7,585~~248

381,~~728~~364

(311,~~143~~116)

Distributions from unconsolidated ventures

600

—

600

10,050

—

10,050

Less:

MPC development expenditures

~~(83,634)~~

~~(114,729)~~

~~31,095~~

(~~256~~77,~~214~~098)

(~~286~~89,~~178~~345)

2912,~~964~~247

Equity in (earnings) losses from unconsolidated ventures

~~(14,310)~~

~~(14,862)~~

~~552~~

~~(21~~14,~~056)~~711

(164,~~990~~108)

(418,~~066)~~819

MPC Net Contribution

~~20,058~~

~~(29,762)~~

~~49,820~~

8(24,~~911~~874)

17(7,~~477~~607)

(817,~~566~~267)

(a)SID collections are shown net of SID transfers to buyers in the respective periods.

MPC Net Contribution ~~increased~~decreased $4917.83 million for the three months ended ~~September~~March 3031, ~~2023~~2024, ~~and decreased $8.6 million for the nine months ended September 30, 2023~~ compared to the ~~same~~prior-year ~~periods in 2022~~period, primarily due to lower MPC ~~development expenditures and higher MPC~~ land sales ~~for the three months ended September 30, 2023,~~ and ~~lower~~ MUD and SID bond collections, net ~~and MPC land sales~~, partially offset by a decrease in MPC development expenditures ~~and an increase in distributions from unconsolidated ventures, net of equity in earnings from unconsolidated ventures for the nine months ended September 30, 2023 compared to the same periods in 2022~~.

MPC Land Inventory The following table summarizes MPC land inventory activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024:

thousands	Bridgeland		~~Columbia (a)~~Summerlin		~~Summerlin~~Teravalis		~~Teravalis~~The Woodlands		The Woodlands Hills		~~The~~Total ~~Woodlands Hills~~MPC		~~Total MPC~~
Balance December 31, 2022	$	538,924	$	16,625	$	1,014,511	$	544,546	$	185,356	$	111,564	$	2,411,526
Balance December 31, 2023	$	533,031	$	1,079,927	$	544,824	$	172,652	$	115,239	$	2,445,673
Development expenditures (b)	129,092		—		103,430		105		3,689		19,898		256,214
Development expenditures (a)	27,777		39,849		235		871		8,366		77,098
MPC Cost of sales	(299,~~921~~392)		—(3,427)		~~(20,134)~~—		—(2)		(~~11,911~~83)		(412,~~168~~904)		~~(66,134)~~
MUD reimbursable costs (c)	(89,908)		—		—		—		(1,166)		(17,203)		(108,277)
MUD reimbursable costs (b)	(19,323)		—		—		(80)		(6,723)		(26,126)
Transfer to Strategic Development and Operating Assets Segments	~~(2,756)~~—		~~(16,625)~~—		—		—(4,294)		~~(3,226)~~—		—(4,294)		~~(22,607)~~
Other	(29,~~649)~~870		—(3,297)		(~~1,108~~53)		18—		~~490~~(4,429)		52,~~024~~091		~~1,775~~
Balance September 30, 2023	$	542,782	$	—	$	1,096,699	$	544,669	$	173,232	$	115,115	$	2,472,497
Balance March 31, 2024	$	541,963	$	1,113,052	$	545,006	$	169,147	$	112,370	$	2,481,538

(a)~~Columbia~~Development ~~MPC~~expenditures ~~land~~are ~~development~~inclusive ~~is complete and the sale~~ of ~~remaining~~capitalized ~~land~~interest orand ~~development~~property ~~of additional commercial assets will occur as the market dictates~~taxes. ~~As such, the remaining Columbia land was transferred to the Strategic Developments segment in the first quarter of 2023.~~

(b)~~Development~~MUD ~~expenditures~~reimbursable ~~are~~costs ~~inclusive~~represent ofland ~~capitalized~~development ~~interest~~expenditures ~~and~~transferred ~~property~~to ~~taxes~~MUD Receivables.

~~(c)MUD~~HHC ~~reimbursable~~2024 ~~costs~~FORM ~~represent land development expenditures transferred to MUD Receivables.~~10-Q | 37

HHC 2023 FORM 10-Q | 44


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents


Seaport

Seaport Entertainment On October 5, 2023, HHH announced the intent to form a new division, Seaport Entertainment, that is expected to include ~~all~~the ofCompany’s ~~the~~entertainment-related assets in New York and Las Vegas, including the Seaport ~~segment,~~in asLower ~~well~~Manhattan asand the Las Vegas Aviators Triple-A Minor League Baseball team, ~~and~~as ~~our~~well ~~80%~~as the Company’s ownership stake in Jean-Georges Restaurants and an interest in and to 80% of the air rights above the Fashion Show Mall in Las Vegas. HHH is establishing Seaport Entertainment with the intention of completing its spinoff as an independent, publicly traded company in 2024, but there can be no assurance regarding the ultimate timing of the spinoff or that the spinoff will ultimately occur.

General The Seaport is part non-stabilized operating asset, part development project, and part operating business. As such, the Seaport has a greater range of possible outcomes than our other projects. The greater uncertainty is largely the result of: (i) seasonality; (ii) potential sponsorship revenue; (iii) potential event revenue; and (iv) business operating risks from various start-up businesses. We operate and own, either directly, through license agreements, or in joint ventures, many of the tenants in the Seaport. As a result, the revenues and expenses of these businesses, as well as the underlying market conditions affecting these types of businesses, will directly impact the NOI of the Seaport. This is in contrast to our other retail properties where we primarily receive lease payments and are not as directly impacted by the operating performance of the underlying businesses. This causes the financial results and eventual stabilized yield of the Seaport to be less predictable than our other operating real estate assets with traditional lease structures. Further, as we open new operating businesses, either owned entirely or in partnership with third parties, we expect to incur pre-opening expenses and operating losses until those businesses stabilize, which likely will not happen until the Seaport reaches its critical mass of offerings. Given the factors and uncertainties listed above, we do not currently provide guidance on our expected NOI yield or stabilization date for the Seaport.

~~Due~~We toprimarily ~~the range of asset types discussed above, we~~ categorize the businesses in the Seaport segment into the following groups: Landlord Operations, Managed Businesses, the Tin Building, and Events and Sponsorships.

Landlord Operations Landlord Operations represent physical real estate in the Historic District and Pier 17 that we have developed and own, and is inclusive of our office, retail, and multi-family properties.

Managed Businesses Managed Businesses represent retail and food and beverage businesses in the Historic District and Pier 17 that the Company owns, either wholly or through partnerships with third parties, and operates, including license and management agreements. These businesses include, among others, The Fulton, Mister Dips, Carne Mare, The Lawn Club, and Malibu Farm. The Fulton and Malibu Farm are managed by Creative Culinary Management Company, LLC (CCMC), a Jean-Georges company, and Mister Dips and Carne Mare are managed by Seaport F&B LLC, an Andrew Carmellini company. These management companies are responsible for employment and supervision of all employees providing services for the food and beverage operations and restaurant as well as day-to-day operations and accounting for food and beverage operations.

The Company owns a 25% interest in Jean-Georges Restaurants, which currently operates over 40 restaurant and hospitality offerings around the world. This ownership interest is reported in accordance with the equity method.

InTin ~~the~~Building The ~~fourth~~Tin ~~quarter~~Building includes both landlord operations and managed business. The Company owns 100% of ~~2023,~~the weTin ~~plan~~Building, towhich ~~expand~~was ~~our~~completed ~~Managed~~and ~~Businesses~~placed ~~portfolio~~in ~~with~~service during the ~~launch~~third quarter of 2022. The ~~Lawn~~Company ~~Club~~leases 100% of the rentable space to the Tin Building by Jean-Georges joint venture, a ~~new~~managed ~~concept~~business ~~that~~in ~~will~~which ~~transform~~the ~~over~~Company 20has an equity ownership interest and reports its ownership interest in accordance with the equity method. Based on capital contribution and distribution provisions for the Tin Building by Jean-Georges,~~000~~ ~~square~~the ~~feet~~Company currently recognizes all of the ~~Fulton~~economic ~~Market~~interest in the venture. The Company recognizes lease payments from the Tin Building ~~into~~by anJean-Georges ~~immersive~~in ~~indoor~~Rental revenue and ~~outdoor~~recognizes ~~experience~~its ~~that~~share ~~includes~~of anincome ~~extensive~~or ~~indoor~~losses ~~grass~~from ~~area~~the joint venture in equity earnings. As the Company currently recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, athe ~~stylish~~Tin ~~clubhouse~~Building ~~bar~~lease has no net impact to Seaport EBT. However, Seaport NOI includes only rental revenue related to the Tin Building lease payments and adoes ~~wide~~not ~~variety~~include ofthe ~~lawn~~rent ~~games~~expense in equity earnings, as equity earnings are excluded from NOI by definition.

Tin Building The Tin Building includes both landlord operations and managed business. The Company owns 100% of the Tin Building, which was completed and placed in service during the third quarter of 2022. The Company leased 100% of the space to the Tin Building by Jean-Georges joint venture, a managed business in which the Company has an equity ownership interest and reports its ownership interest in accordance with the equity method. Based on capital contribution and distribution provisions for the Tin Building by Jean-Georges, the Company currently recognizes all of the economic interest in the venture. The Company recognizes lease payments from the Tin Building by Jean-Georges in Rental revenue and recognizes its share of the offsetting rent expense in Equity earnings. As the Company currently recognizes 100% of operating income or losses from the Tin Building by Jean-Georges, the Tin Building lease has no net impact to Seaport EBT. However, Seaport NOI is impacted by the Rental revenue related to the Tin Building lease payments, as equity earnings are excluded from NOI by definition.

The Tin Building by Jean-Georges opened in late September 2022, with an expanded focus on experiences including in-person dining, retail shopping, and delivery and is managed by CCMC, a Jean-Georges company.

HHC ~~2023~~2024 FORM 10-Q | 4538


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

Events and Sponsorships Our events and sponsorships businesses include our concert series, event catering, private events, and sponsorships. Food and beverage operations associated with concert concessions and catering are operated under management agreements with CCMC.

The 2023 summer concert series, which began in May 2023 and ran through the end of October 2023, included 60 shows and sold over 194,000 tickets to date, representing over 93% of available ticket inventory. We hosted 19 concerts and welcomed approximately 58,000 guests in the second quarter of 2023, and hosted 39 concerts and welcomed approximately 113,000 guests in the third quarter of 2023.

250 Water Street In 2021, the Company received the necessary approvals for its 250 Water Street development project, which includes a mixed-use development with affordable and market-rate apartments, community-oriented spaces, and office space. In May 2021, the Company received approval from the New York City Landmarks Preservation Commission (LPC) on its proposed design for the 250 Water Street site. The Company received final approvals in December 2021 through the New York City Uniform Land Use Review Procedure known as ULURP, which allowed the necessary transfer of development rights to the parking lot site.

Also in December 2021, an amendment to the Seaport ground lease was executed giving ~~HHC~~the Company extension options, at the discretion of ~~HHC~~the Company, for an additional 48 years from its current expiration in 2072 until 2120. We received a building foundation permit from the New York City Department of Buildings and began initial foundation work and remediation in the second quarter of 2022. Remediation of the site as a volunteer of the New York State Brownfield Cleanup program iswas ~~approximately~~completed ~~80% complete and is expected to be finished~~ in December 2023. Various lawsuits have been filed challenging the governmental approval of our development project. For additional information regarding these lawsuits, see Note 9 - Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Form 10-Q.

Segment EBT Segment EBT for Seaport is presented below:

Seaport Segment EBT

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Rental revenue (a)

~~5,213~~

~~5,001~~

~~212~~

166,~~231~~382

125,~~277~~389

~~3,954~~993

Other land, rental, and property revenues

~~24,277~~

~~27,500~~

~~(3,223)~~

475,~~960~~120

576,~~776~~508

(91,~~816~~388)

Total revenues

~~29,490~~

~~32,501~~

~~(3,011)~~

6411,~~191~~502

7011,~~053~~897

(~~5,862~~395)

Operating costs

~~(33,084)~~

~~(31,295)~~

~~(1,789)~~

(7820,~~341~~518)

(7718,~~377~~767)

(~~964~~1,751)

Rental property real estate taxes

~~(174)~~

~~(173)~~

~~(1)~~

(~~511~~176)

(~~719~~168)

~~208~~(8)

(Provision for) recovery of doubtful accounts

~~(45)~~

~~(109)~~

(32791)

~~(1,233)~~19

~~1,201~~(810)

Total operating expenses

~~(33,303)~~

~~(31,404)~~

~~(1,899)~~

(7821,~~884~~485)

(7918,~~329~~916)

~~445~~(2,569)

Segment operating income (loss)

~~(3,813)~~

~~1,097~~

~~(4,910)~~

(149,~~693~~983)

(97,~~276~~019)

(52,~~417~~964)

Depreciation and amortization

~~(10,808)~~

~~(9,651)~~

~~(1,157)~~

(315,~~804~~757)

(2510,~~194~~527)

(64,~~610)~~770

Interest income (expense), net

~~1,358~~

~~1,731~~

~~(373)~~

3(2,~~855~~012)

31,~~003~~186

~~852~~(3,198)

Other income (loss), net

~~313~~

~~(18)~~

~~331~~

~~(1,287)~~—

~~289~~1

(1~~,576~~)

Equity in earnings (losses) from unconsolidated ventures (a)

~~(46,619)~~

~~(11,273)~~

~~(35,346)~~

(6810,~~335~~280)

(2010,~~223~~820)

~~(48,112)~~540

Gain (loss) on extinguishment of debt

(48)

—

(48)

—

(48)

Segment EBT

(28,032)

(27,179)

(853)

Provision for impairment

(672,492)

—

(672,492)

—

(672,492)

Segment EBT

(732,109)

(18,114)

(713,995)

(784,804)

(51,401)

(733,403)

(a) Lease payments for the Tin Building included in Rental revenue and offset in Equity losses were $2.89 million for the three months ended ~~September~~March 3031, ~~2023~~2024, and $82.58 million for the ~~nine~~three months ended ~~September~~March 3031, 2023. ~~No rental payments were made during the first or second quarter of 2022 as the lease had not yet commenced.~~ Refer to the Tin Building discussion above for additional detail.

For the three months ended ~~September~~March 3031, ~~2023~~2024:

Seaport segment EBT decreased $~~714.~~0.9 million compared to the prior-year periods primarily due to the following:

–~~Provision~~Total ~~for~~revenues, ~~impairment~~net ~~includes~~of Operating costs decreased $~~672~~2.51 million ~~and~~primarily ~~Equity~~due ~~losses~~to ~~includes~~reduced ~~$37.0~~restaurant ~~million~~revenue ~~related~~at toPier 17, lower sponsorship revenue, and increased costs associated with the planned spinoff of Seaport ~~impairment~~Entertainment, ~~recognized~~partially inoffset ~~the~~by ~~current~~improved ~~period.~~rental ~~Refer~~revenue tofrom ~~Note~~the 4Fulton -Market ~~Impairment~~Building, ~~for~~which ~~additional~~is ~~information~~now 100% occupied.

–~~Total~~As ~~revenues,~~a ~~net~~result of ~~Operating~~the ~~costs~~impairment ~~decreased~~of ~~$4.8~~our ~~million~~Seaport ~~primarily~~assets ~~due~~in to the ~~absence~~third quarter of ~~certain~~2023, ~~restaurant~~current ~~concepts~~period inEBT ~~the~~includes ~~current~~a ~~year,~~net increase ~~fewer~~of ~~private~~$1.6 ~~events,~~million due to lower depreciation and ~~poor~~amortization ~~weather~~expense, ~~conditions~~offset by increased interest expense due to lower capitalized interest.

~~–Depreciation~~HHC ~~expense~~2024 ~~increased~~FORM ~~$1.2 million primarily related to the Tin Building, which was completed and placed in service in the third quarter of 2022.~~10-Q | 39

HHC 2023 FORM 10-Q | 46


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

These decreases to EBT were partially offset by the following:

–Equity losses decreased $1.7 million, excluding the impact of the $37.0 million impairment charge above, primarily related to the Tin Building by Jean-Georges, which opened in the third quarter of 2022, as operational improvements and changes to the operating model began to be realized.

For the nine months ended September 30, 2023:

Seaport segment EBT decreased $733.4 million compared to the prior-year periods primarily due to the following:

–Provision for impairment and Equity losses include the Seaport impairment recognized in the current period, as discussed above.

–Equity losses increased $11.1 million, excluding the impact of the $37.0 million impairment charge above, primarily due to operating losses for the Tin Building by Jean-Georges, which opened in the third quarter of 2022.

–Depreciation expense increased $6.6 million primarily related to the Tin Building, which was completed and placed in service in the third quarter of 2022.

–Total revenues, net of Operating costs decreased $6.8 million primarily due to the absence of certain restaurant concepts, fewer private events, and poor weather conditions in the current year, as well as COVID-related recoveries at the Fulton Market Building in the prior year, partially offset by an increase in rental revenue driven by the opening of the Tin Building.

Net Operating Income A reconciliation of Seaport segment EBT to Seaport NOI is presented below:

Seaport NOI	~~Three Months Ended September 30,~~		Three Months Ended March 31,				~~Nine Months Ended September 30,~~
thousands	~~2023~~		~~2022~~		~~$ Change~~		~~2023~~2024		~~2022~~2023		$ Change
Total Seaport segment EBT	$	~~(732,109)~~	$	~~(18,114)~~	$	~~(713,995)~~	$	(~~784~~28,~~804~~032)	$	(5127,~~401~~179)	$	(~~733,403~~853)
Add back:
Depreciation and amortization	~~10,808~~		~~9,651~~		~~1,157~~		315,~~804~~757		2510,~~194~~527		6(4,~~610~~770)
Interest (income) expense, net	~~(1,358)~~		~~(1,731)~~		~~373~~		(32,~~855)~~012		(31,~~003~~186)		~~(852)~~3,198
Equity in (earnings) losses from unconsolidated ventures	~~46,619~~		~~11,273~~		~~35,346~~		6810,~~335~~280		2010,~~223~~820		~~48,112~~(540)
(Gain) loss on extinguishment of debt	48		—		48		48		—		48
Impact of straight-line rent							502		586		(84)
Impact of straight-line rent	435		(185)		620		1,567		1,519		48
Other (income) loss, net							876		847		29
Other (income) loss, net	2,163		674		1,489		5,480		2,610		2,870
Seaport NOI							$	(8,605)	$	(5,585)	$	(3,020)
Provision for impairment	672,492		—		672,492		672,492		—		672,492
Seaport NOI	$	(902)	$	1,568	$	(2,470)	$	(8,933)	$	(4,858)	$	(4,075)

The Seaport, including Managed Businesses, Events and Sponsorships, and the Tin Building, is approximately 6768% leased. We may continue to incur operating expenses in excess of rental revenues while the remaining available space is in lease-up, as the Seaport continues to move toward its critical mass of offerings.

The table below presents Seaport NOI by category:

Seaport NOI by Category

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Landlord Operations

~~(6,242)~~

~~(4,335)~~

~~(1,907)~~

(154,~~292~~853)

(104,~~260~~290)

(~~5,032~~563)

Landlord Operations - Multi-family

~~(7)~~

7658

9628

~~(20)~~30

Managed Businesses

~~644~~

~~1,010~~

~~(366)~~

(13,~~942~~142)

~~149~~(2,536)

(~~2,091~~606)

Tin Building

~~2,286~~

~~1,612~~

~~674~~

72,~~061~~258

12,~~612~~415

~~5,449~~(157)

Events and Sponsorships

~~2,395~~

~~3,259~~

~~(864)~~

1(2,~~164~~926)

3(1,~~545~~202)

(21,~~381~~724)

Seaport NOI

~~(902)~~

~~1,568~~

~~(2,470)~~

(8,~~933~~605)

(45,~~858~~585)

(43,~~075~~020)

Seaport NOI decreased $23.50 million for the three months ended ~~September~~March 3031, ~~2023 and $4.1 million for the nine months ended September 30~~2024, ~~2023. The decreases in Landlord Operations NOI are~~ primarily due to increased ~~marketing~~ costs, ~~insurance~~associated ~~expense,~~with ~~and~~the ~~tax~~planned ~~expense.~~spinoff ~~The~~of ~~decrease~~Seaport inEntertainment. Additionally, the ~~nine~~decrease ~~months~~in ~~ended~~Events ~~September~~and ~~30,~~Sponsorships ~~2023~~NOI iswas ~~also~~impacted ~~due~~by tolower ~~COVID-related~~sponsorship ~~recoveries~~revenue, atand the ~~Fulton~~decrease ~~Market Building~~ in ~~the prior year. The decreases in~~ Managed Businesses ~~and Events and Sponsorships~~ NOI ~~are~~was ~~due~~impacted toby ~~the absence of certain restaurant concepts, fewer private events, and~~ lower revenues across our restaurant portfolio related to poor weather conditions in the current year. ~~These decreases were partially offset by an increase in Tin Building NOI resulting from the opening of the Tin Building in the third quarter of 2022.~~

HHC 2023 FORM 10-Q | 47

MANAGEMENT’S NARRATIVE ANALYSISRESULTS OF OPERATIONS Table of Contents

Tin Building in the table above represents NOI from our landlord business and, as defined, excludes the impact of the Company’s equity ownership interest in the Tin Building by Jean-Georges managed business which opened in the third quarter of 2022. The table below presents the above NOI related to the Tin Building, which primarily represents lease payments from the Tin Building by Jean-Georges, as well as the Company’s share of NOI related to its investment in the Tin Building by Jean-Georges, which primarily represents the operations of the Tin Building marketplace and includes rent expense paid to the Company.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Tin Building

~~2,286~~

~~1,612~~

~~674~~

72,~~061~~258

12,~~612~~415

~~5,449~~(157)

Tin Building by Jean-Georges

~~(8,074)~~

~~(11,366)~~

~~3,292~~

(268,~~867~~746)

(209,~~565~~158)

~~(6,302)~~412

Total

~~(5,788)~~

~~(9,754)~~

~~3,966~~

(196,~~806~~488)

(186,~~953~~743)

~~(853)~~255

~~Tin~~HHC ~~Building~~2024 byFORM ~~Jean~~10-Georges NOI losses during 2022 relate to costs incurred prior to the marketplace opening in the third quarter of 2022 and elevated operating losses during the early months of operation. In 2023, the Tin Building by Jean-Georges was open seven days per week, with strong foot traffic and sales. However, operating losses remained elevated in 2023, as the Company continues to refine the operating model during the marketplace’s first year in operations, and the Seaport experienced poor weather conditions throughout the year.Q | 40

HHC 2023 FORM 10-Q | 48


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents


Strategic Developments

Our Strategic Developments assets generally require substantial future development to maximize their value. Other than our condominium properties, most of the properties and projects in this segment do not generate revenues. Our expenses relating to these assets are primarily related to costs associated with constructing the assets, selling condominiums, marketing costs associated with our Strategic Developments, carrying costs including, but not limited to, property taxes and insurance, and other ongoing costs relating to maintaining the assets in their current condition. If we decide to redevelop or develop a Strategic Developments asset, we ~~would~~ expect that with the exception of the residential portion of our condominium projects, upon completion of development, the asset would likely be reclassified to Operating Assets when the asset is placed ~~into~~in service and NOI would become a meaningful measure of its operating performance. All development costs discussed herein are exclusive of land costs.

Segment EBT Segment EBT for Strategic Developments is presented below:

Strategic Developments Segment EBT

~~Three Months Ended September 30,~~

Three Months Ended March 31,

~~Nine Months Ended September 30,~~

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Condominium rights and unit sales

~~25,962~~

~~418,645~~

~~(392,683)~~

~~46,915~~23

~~459~~6,~~681~~087

(~~412~~6,~~766~~064)

Rental revenue

~~136~~

—

~~136~~

~~250~~169

—

~~250~~169

Other land, rental, and property revenues

~~383~~

~~708~~

~~(325)~~

~~1,514~~401

~~1,974~~353

~~(460)~~48

Total revenues

~~26,481~~

~~419,353~~

~~(392,872)~~

~~48,679~~593

~~461~~6,~~655~~440

(~~412~~5,~~976~~847)

Condominium rights and unit cost of sales

~~(22,537)~~

~~(295,300)~~

~~272,763~~

(563,~~390~~861)

(~~329~~4,~~026~~536)

~~272,636~~675

Operating costs

~~(6,364)~~

~~(4,665)~~

~~(1,699)~~

(174,~~160~~149)

(145,~~284~~852)

(21,~~876)~~703

Rental property real estate taxes

~~(719)~~

~~(550)~~

~~(169)~~

(~~2,470~~644)

(~~961~~671)

~~(1,509)~~27

Total operating expenses

~~(29,620)~~

~~(300,515)~~

~~270,895~~

(768,~~020~~654)

(~~344~~11,~~271~~059)

~~268~~2,~~251~~405

Segment operating income (loss)

~~(3,139)~~

~~118,838~~

~~(121,977)~~

(278,~~341~~061)

~~117~~(4,~~384~~619)

(~~144~~3,~~725~~442)

Depreciation and amortization

~~(962)~~

~~(1,406)~~

~~444~~

(21,~~848~~419)

(~~4,083~~943)

~~1,235~~(476)

Interest income (expense), net

~~4,412~~

~~5,817~~

~~(1,405)~~

114,~~917~~024

122,~~334~~063

~~(417)~~1,961

Other income (loss), net

~~900~~

~~(819)~~

~~158~~3

~~1,361~~94

(~~1,203~~91)

Equity in earnings (losses) from unconsolidated ventures

~~(13)~~

9439

~~863~~5

~~(769)~~34

Gain (loss) on sale or disposal of real estate and other assets, net

236

—

236

(9)

245

Segment EBT

(5,414)

(3,400)

(2,014)

Segment EBT

687

124,136

(123,449)

(17,784)

127,850

(145,634)

For the three months ended ~~September~~March 3031, ~~2023~~2024:

Strategic Developments segment EBT decreased $~~123~~2.40 million compared to the prior-year period primarily due to the following:

–Condominium sales, net of cost of sales decreased $~~119~~2.94 million ~~due to the timing of condominium closings~~, ~~including~~excluding the ~~completion~~change ~~of Kō'ula~~ in ~~the~~remediation ~~third~~costs ~~quarter~~ of ~~2022,~~$3.0 million ~~and~~discussed ~~pricing~~below, ~~reductions~~due ~~in 2023 at ‘A‘ali‘i and Kō'ula~~ to ~~facilitate~~ the ~~close-out~~timing of ~~remaining~~condominium ~~units~~closings. We ~~closed~~had onno 16condominium ~~units~~closings ~~at ‘A‘ali‘i and 10 units at Kō'ula~~ during the ~~third~~three ~~quarter~~months ofended ~~2023~~March 31, 2024, compared to ~~398~~one ~~units~~unit at Kō'ula and 6four units at ‘A‘ali‘i during the prior-year period. The lower volume of condominium closings ~~in 2023~~ is expected as our completed towers are ~~almost~~now 100.0% sold and the next tower, Victoria Place, is not scheduled for completion until late 2024.

~~For~~–Condominium cost of sales includes an increase of $3.0 million due to charges related to the ~~nine~~defect ~~months~~remediation ~~ended~~at ~~September~~Waiea. 30We charged $3.0 million in the first quarter of 2024, ~~2023:~~to fund the final remediation expenditures, compared to no additional costs charged in the prior-year period.

~~Strategic~~–Operating ~~Developments~~costs ~~segment EBT~~ decreased $~~145~~1.67 million, ~~compared~~primarily due to ~~the~~a ~~prior-year~~decrease ~~period~~in ~~primarily~~legal ~~due~~costs compared to the ~~following:~~prior-year period.

–Condominiums Condominium ~~sales,~~revenue ~~net~~is ofrecognized ~~cost~~when ofconstruction ~~sales decreased $126.7 million, excluding the change in remediation costs~~ of ~~$13.4 million discussed below, due to~~ the ~~timing of~~ condominium ~~closings.~~tower Weis ~~closed~~complete ~~on 31 units at ‘A‘ali‘i~~ and 15unit ~~units~~sales ~~at Kō'ula during the nine months ended September 30~~close, ~~2023,~~leading ~~compared~~ to ~~398~~variability ~~units~~in atrevenue ~~Kō'ula,~~recognized 49between ~~units at ‘A‘ali‘i, and 1 unit at Waiea during the prior-year period~~periods.

~~–Condominium~~Completed ~~cost~~Condominiums As of ~~sales~~March 31, ~~increased~~2024, ~~$13.4 million~~our ~~due~~six tocompleted ~~charges~~condominiums ~~related~~in toWard ~~the~~Village, ~~defect~~Ae`o, ~~remediation~~Ke ~~accrual~~Kilohana, atAnaha, Waiea., ~~We charged $16.1 million in 2023~~‘A‘ali‘i, ~~related~~and ~~to additional anticipated costs~~Kō‘ula, ~~compared~~are tocompletely $2sold.~~7 million charged in 2022.~~

HHC ~~2023~~2024 FORM 10-Q | 4941


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents

~~Ward~~Condominiums ~~Village Condominium~~Under ~~revenue is recognized when construction of the condominium tower is complete and unit sales close, leading to variability in revenue recognized between periods.~~ Construction

~~Completed~~Ward ~~Condominiums~~Village As of ~~September~~March 3031, ~~2023~~2024, ~~our~~98.2% ~~six~~of ~~completed~~the units at our three towers ~~were~~under ~~almost~~construction, ~~100.0%~~Victoria ~~sold~~Place, ~~with~~The ~~only~~Park ~~one~~Ward ~~unit~~Village, ~~remaining~~and atUlana ~~Kō'ula~~Ward Village, ~~which~~are ~~was~~under ~~sold~~contract. ~~subsequent~~We broke ground on Victoria Place in February 2021, and expect to complete construction in the fourth quarter ~~end~~of 2024. ~~Ae`o~~Victoria Place, Kewhich ~~Kilohana,~~is ~~Anaha,~~100.0% ~~Waiea~~presold, ~~and~~will ~~‘A‘ali‘i~~consist ~~are~~of ~~completely~~349 ~~sold~~one-, two- and three-bedroom units.

~~Condominiums~~We ~~Under~~broke ~~Construction As~~ground ofon ~~September 30, 2023, 97.8% of the units at our three towers under construction, Victoria Place,~~ The Park Ward Village, ~~and~~in ~~Ulana~~October ~~Ward Village~~2022, ~~are~~and ~~under~~expect ~~contract.~~to Wecomplete ~~launched~~construction ~~public presales of our seventh condominium project, Victoria Place,~~ in ~~December 2019 and broke ground in February 2021~~2026. ~~Victoria~~The ~~Place~~Park ~~will~~Ward beVillage ~~a 40-story, 349-unit condominium project that~~ will consist of 545 studio, one-, two-, and three-bedroom residences. As of ~~the~~March 31, ~~second~~2024, ~~quarter~~we ofhave ~~2022,~~entered ~~Victoria~~into ~~Place~~contracts ~~was~~for ~~100~~517 units, representing 94.09% ~~presold~~of total units.

We ~~launched~~broke ~~public~~ground ~~sales~~on ofUlana ~~our eighth condominium project, The Park~~ Ward Village, in ~~July~~January ~~2021~~2023 and ~~broke~~expect ~~ground~~to incomplete ~~December~~construction ~~2022~~in 2025. ~~The~~Ulana ~~Park~~ Ward Village, ~~will~~which beis a100.0% ~~41-story~~presold, ~~545-unit~~will ~~condominium~~consist ~~project~~of ~~and~~696 ~~will include~~ studio, one-, two-, and three-bedroom ~~residences~~units. AsAll ofunits ~~September 30,~~are ~~2023,~~designated weas ~~have~~workforce ~~entered~~housing ~~into~~units ~~contracts~~and ~~for~~are ~~510~~being ~~units,~~offered ~~representing~~to ~~93.6%~~local ofresidents ~~total~~who ~~units~~meet certain maximum income and net worth requirements.

InPredevelopment 2021, we announced plans for our ninth condominium project, Ulana Ward Village, and broke ground in January 2023. This mixed-use residence will consist of 696 studio, one-, two- and three-bedroom units. All units are designated as workforce housing units and are being offered to local residents who meet certain maximum income and net worth requirements. As of the third quarter of 2023, Ulana is 100.0% presold.Condominiums

~~Predevelopment~~Ward ~~Condominiums~~Village InWe ~~September 2022, we~~ launched public ~~sales~~presales of ~~our~~Kalae ~~tenth~~in ~~condominium~~September ~~project~~2022, ~~Kalae.~~and ~~This~~expect ~~will~~to bebegin aconstruction ~~38-story,~~in ~~329-unit~~the ~~condominium~~second ~~project~~quarter ~~and~~of 2024. Kalae will consist of 329 one-, two-, and three-bedroom residences. As of ~~September~~March 3031, ~~2023~~2024, we have entered into contracts for ~~280~~296 units, representing 8590.10% of total units.

We launched public presales for The ~~following~~Launiu ~~provides~~in ~~further~~February ~~detail~~2024. ~~for~~The ~~Ward~~Launiu ~~Village~~will asconsist of ~~September~~485 studio, one-, two-, and three-bedroom residences. As of March 3031, ~~2023:~~2024, we have entered into contracts for 182 units, representing 37.5% of total units.

		Units Closed	Units Under Contract	Total Units	Total % of Units Closed or Under Contract		Total % of Residential Square Feet Closed or Under Contract		Completion Date
Completed
Waiea	(a)	177	—	177	100.0	%	100.0	%	Q4 2016
Anaha	(a)	317	—	317	100.0	%	100.0	%	Q4 2017
Ae`o	(a)	465	—	465	100.0	%	100.0	%	Q4 2018
Ke Kilohana	(a)	423	—	423	100.0	%	100.0	%	Q2 2019
‘A‘ali‘i	(a)	750	—	750	100.0	%	100.0	%	Q4 2021
Kō'ula	(b)	564	—	565	99.8	%	99.9	%	Q3 2022
Under construction
Victoria Place		—	349	349	100.0	%	100.0	%	Q3 2024
The Park Ward Village	(c)	—	510	545	93.6	%	94.2	%	2025
Ulana Ward Village	(d)	—	696	696	100.0	%	100.0	%	2025
Predevelopment
Kalae	(e)	—	280	329	85.1	%	88.5	%	2026

The Woodlands We launched public presales of our first condominium project in The Woodlands, The Ritz-Carlton Residences, in March 2024. The Ritz-Carlton Residences will consist of 111 one-, two-, three-, and four-bedroom residences. The development sits on the last available large-scale residential site on Lake Woodlands, spanning roughly eight acres across approximately 1,200 feet of premier lakefront shoreline. As of March 31, 2024, we have entered into contracts for 56 units, representing 50.5% of total units.

The following provides further detail for all condominium projects as of March 31, 2024:


	Location	Units Closed	Units Under Contract	Total Units	Total % of Units Closed or Under Contract		Completion Date
Completed
Waiea (a)	Honolulu, HI	177	—	177	100.0	%	Q4 2016
Anaha (a)	Honolulu, HI	317	—	317	100.0	%	Q4 2017
Ae`o (a)	Honolulu, HI	465	—	465	100.0	%	Q4 2018
Ke Kilohana (a)	Honolulu, HI	423	—	423	100.0	%	Q2 2019
‘A‘ali‘i (a)	Honolulu, HI	750	—	750	100.0	%	Q4 2021
Kō'ula (b)	Honolulu, HI	565	—	565	100.0	%	Q3 2022
Under construction
Victoria Place	Honolulu, HI	—	349	349	100.0	%	Q4 2024
The Park Ward Village (c)	Honolulu, HI	—	517	545	94.9	%	2026
Ulana Ward Village (d)	Honolulu, HI	—	696	696	100.0	%	2025
Predevelopment
Kalae (e)	Honolulu, HI	—	296	329	90.0	%	2027
The Launiu (f)	Honolulu, HI	—	182	485	37.5	%	2027
The Ritz-Carlton Residences (g)	The Woodlands, TX	—	56	111	50.5	%	2027

(a)The retail portions of these projects are 100% leased and have been placed in service.

(b)The retail portion of this project has been placed in service and is 5356% leased.

(c)~~There~~The Park Ward Village will beinclude approximately 26,800 square feet of retail space ~~as part of this project~~.

(d)~~There~~Ulana Ward Village will beinclude approximately 32,100 square feet of retail space ~~as part of this project~~.

(e)~~There~~Kalae will beinclude approximately 2,000 square feet of retail space ~~as part of this project~~.

~~HHC~~(f)The ~~2023~~Launiu ~~FORM~~will include approximately 10~~-Q | 50~~,000 square feet of retail space.

(g)The Ritz-Carlton Residences will include approximately 5,800 square feet of retail space.

HHC 2024 FORM 10-Q | 42


MANAGEMENT’S NARRATIVE ANALYSIS RESULTS OF OPERATIONS			Table of Contents


Corporate Income, Expenses, and Other Items

The following table contains certain corporate-related and other items not related to segment activities and that are not otherwise included within the segment analyses. Variances related to income and expenses included in NOI or EBT are explained within the previous segment discussions. Significant variances for consolidated items not included in NOI or EBT are described below:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

thousands

~~2023~~

~~2022~~

~~$ Change~~

~~2023~~2024

~~2022~~2023

$ Change

Corporate income

4516

4314

General and administrative

~~(21,410)~~

~~(19,471)~~

~~(1,939)~~

(6530,~~180~~174)

(6023,~~874~~553)

(46,~~306~~621)

Corporate interest expense, net

~~(20,740)~~

~~(21,078)~~

~~338~~

(6717,~~519~~582)

(6424,~~948~~195)

(26,~~571)~~613

Corporate other income (loss), net

~~701~~

~~(678)~~

~~2,781~~480

~~881~~2,707

1(2,~~900~~227)

Corporate depreciation and amortization

~~(974)~~

~~(1,140)~~

~~166~~

(~~2,599~~805)

(~~2,878~~800)

~~279~~(5)

Other

~~(2,225)~~

~~(2,902)~~

~~677~~

(83,~~885~~818)

(73,~~985~~571)

(~~900~~247)

Income tax (expense) benefit

~~144,701~~

~~(33,858)~~

~~178,559~~

~~161~~17,~~349~~029

~~(41~~1,~~822)~~278

~~203~~15,~~171~~751

Total Corporate income, expenses and other items

99,390

(77,734)

177,124

19,992

(177,583)

197,575

Total Corporate income, expenses, and other items

(34,854)

(48,120)

13,266

For the three months ended ~~September~~March 3031, ~~2023~~2024:

Corporate income, expenses, and other items was favorably impacted compared to the prior-year period by the following:

–Income tax ~~expense~~benefit ~~decreased~~increased $~~178~~15.68 million primarily due to a decrease in Income before income taxes. Refer to Note 10 - Income Taxes in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Form 10-Q for additional information.

–Corporate interest expense, net decreased $6.6 million primarily due to higher interest income driven by higher interest rates and higher average account balances, and due to the change in value related to derivative instruments. Refer to Note 8 - Derivative Instruments and Hedging Activities in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Form 10-Q for additional information on derivative instruments.

Corporate income, expenses, and other items was unfavorably impacted compared to the prior-year period by the following:

–General and administrative expenses increased $16.96 million primarily attributable to an ~~increase~~increased inlegal ~~compensation~~ and ~~other~~consulting ~~expenses~~fees related to the planned spinoff of Seaport Entertainment.

~~For~~–Corporate ~~the~~other ~~nine~~income ~~months~~decreased ~~ended~~$2.2 ~~September~~million ~~30,~~primarily related to higher insurance proceeds in 2023:.

~~Corporate~~HHC ~~income,~~2024 ~~expenses,~~FORM ~~and other items was favorably impacted compared to the prior~~10-~~year period by the following:~~Q | 43

–Income tax expense decreased $203.2 million primarily due to a decrease in Income before income taxes. Refer to Note 10 - Income Taxes for additional information.

–Corporate other income increased $1.9 million primarily related to the receipt of insurance proceeds.

Corporate income, expenses, and other items was unfavorably impacted compared to the prior-year period by the following:

–General and administrative expenses increased $4.3 million primarily attributable to an increase in compensation and other expenses.

–Corporate interest expense, net increased $2.6 million primarily due to the change in value related to derivative instruments, partially offset by higher interest income due to rising interest rates. Refer to Note 8 - Derivative Instruments and Hedging Activities for additional information on derivative instruments.

HHC 2023 FORM 10-Q | 51

Table of Contents

Item 4. Controls and Procedures


DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by SEC rules, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September~~March 3031, ~~2023~~2024, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of ~~September~~March 3031, ~~2023~~2024.


CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes to our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

HHC ~~2023~~2024 FORM 10-Q | 5244


OTHER INFORMATION			Table of Contents


PART II

Item 1. Legal Proceedings

Please refer to Note 9 - Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Form 10-Q.

Item 1A. Risk Factors

~~RISKS~~There ~~RELATED~~are TOno ~~THE~~material ~~COMPANY'S~~changes ~~HOLDING~~to ~~COMPANY~~the ~~STRUCTURE~~risk OFfactors ~~THE~~previously ~~COMPANY'S~~disclosed ~~PARENT~~in our 2023 Annual Report.

There are no material changes to the risk factors previously disclosed in our 2022 Annual Report, with the exception of the additional risk factor discussed below:

The Company's parent holding company, Howard Hughes Holdings Inc., is dependent on the operations and funds of the Company.

The Company’s parent holding company, Howard Hughes Holdings Inc. (HHH), has no business operations of its own, and HHH’s only significant assets are the outstanding equity interests of its subsidiaries, including the Company. As a result, HHH relies on cash flows from its subsidiaries, including the Company to meet its financial obligations, including to service any debt obligations that HHH may incur from time to time in the future. Legal and contractual restrictions in agreements governing future indebtedness of the Company, as well as the Company’s financial condition and future operating requirements, may limit the Company’s ability to distribute cash to HHH. If the Company is limited in its ability to distribute cash to HHH, or if the earnings or other available assets of the Company and HHH’s other subsidiaries are not sufficient to pay distributions or make loans to HHH in the amounts or at the times necessary for HHH to meet its financial obligations, then HHH may take actions with respect to the Company that may materially adversely affect the business, financial condition, cash flows, results of operations, and reputation of the Company. Further, the Company does not have control over HHH’s business decisions, and HHH is under no obligation to adopt a business strategy that is favorable to the Company.

HHC 2023 FORM 10-Q | 53

Item 6. Exhibits

The following Exhibit Index to this Quarterly Report lists the exhibits furnished as required by Item 601 of Regulation S-K and is incorporated by reference.

Exhibit Number						Description
2.1						Agreement and Plan of Merger, dated as of August 11, 2023, by and among The Howard Hughes Corporation, Howard Hughes Holdings Inc. and HHC Merger Sub Co. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 11, 2023)
3.1						Third Amended and Restated Certificate of Incorporation of The Howard Hughes Corporation, dated August 11, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed August 11, 2023)
3.2						Second Amended and Restated Bylaws of The Howard Hughes Corporation, dated August 11, 2023 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed August 11, 2023)
10.1						Assignment and Assumption Agreement by and between The Howard Hughes Corporation and Howard Hughes Holdings Inc., dated as of August 11, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 11, 2023)
31.1+						Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+						Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1++						Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH+						Inline XBRL Taxonomy Extension Schema Document
101.CAL+						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB+						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE+						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF+						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

+ Filed herewith

++ Furnished herewith

Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023, (iii) the Condensed Consolidated Balance Sheets as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, (iv) Condensed Consolidated Statements of Equity for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, (v) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, and (vi) the Notes to Condensed Consolidated Financial Statements.

HHC ~~2023~~2024 FORM 10-Q | 5445

Table of Contents


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						The Howard Hughes Corporation
						By:			/s/ Carlos A. Olea
									Carlos A. Olea
									Chief Financial Officer
									November 6, 2023
									May 8, 2024

HHC ~~2023~~2024 FORM 10-Q | 5546

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